AML in the Art Market: Auction Houses, Galleries and Antique Dealers

For many years, the art market has operated at the intersection of trust, personal relationships and discretion. High transaction values, complex commercial relationships and the relative anonymity of buyers and sellers have made it an attractive target for those seeking to introduce proceeds of crime into the legal economy. As a result, auction houses, art galleries and antique dealers have been explicitly brought under AML regulations (Anti-Money Laundering and Counter-Terrorist Financing), both at the EU and national levels. For many entities, this has meant the need to change their existing operating models and implement formal compliance procedures.

In this article, we explain why the art market has been subject to AML regulations and what specific obligations arise for auction houses, art galleries and antique dealers.

Why has the art market long attracted money launderers?

The attractiveness of the art market to those engaged in money laundering results from a unique combination of very high economic value and structural opacity, which for decades was perceived as a natural feature of the sector. A single painting, sculpture or antique may be worth millions of euros, while remaining relatively easy to transport, store and conceal. For this reason, international institutions, including the FATF, the European Commission and Europol, have for years identified the art market as an area of increased risk in the context of money laundering and the concealment of asset origins. According to the most important economic analyses, the global art market currently exceeds USD 60 billion annually.

Anonymity and a culture of transactional confidentiality

For a long time, the art market was based on private relationships and discretion, which allowed buyers and sellers to remain anonymous. Transactions were often carried out through auction houses, dealers or special purpose vehicles, without disclosing the identity of the ultimate client. Until recently, galleries and auction houses in many jurisdictions were not legally required to identify clients or report suspicious activities, allowing individuals acting illegally to operate outside the financial supervision system.

High value and easy mobility of artworks

Works of art allow enormous value to be concentrated in relatively small and easily movable objects. A single painting may represent a value comparable to a real estate portfolio, while still being transportable across borders or deposited in a private storage facility without raising suspicion. Law enforcement authorities point out that particularly vulnerable to abuse are small yet highly valuable collectible items, such as antiques, coins or rare artefacts, which may be used for the discreet transfer of assets between jurisdictions.

Subjective valuation and the absence of a unified reference market

Unlike financial instruments or commodities, works of art do not have an objective, universally applicable “market price”. Their value depends on expert opinions, current trends, the artist’s reputation and the willingness of a particular buyer to pay a given price. This subjectivity creates room for valuation manipulation, for example by deliberately overpaying for artworks using illicit funds and then reselling them with an apparently legitimate profit, or by entering into pre-arranged transactions at inflated or deflated prices in order to obscure the flow of money.

Freeports and art storage facilities

An important element of the art market’s infrastructure consists of freeports (such as those in Geneva, Luxembourg or Monaco). They offer high levels of security, confidentiality and favourable tax conditions. Works of art may be stored there for many years in a “transit” status, changing ownership only on paper, without physically leaving the facility.

Cash and intermediaries as a historical systemic loophole

For a long time, the art market allowed high-value cash payments and extensive use of intermediaries acting on behalf of clients. As a result, auction houses and galleries often did not know the identity of the ultimate buyer or the source of funds used for the purchase. Reports by EU institutions indicate that the lack of an obligation to identify the beneficial owner was one of the key loopholes exploited to introduce illicit money into circulation. From a regulatory perspective, the art market today does not differ significantly from the financial sector or the real estate market – in each of these areas, substantial values are invested with limited transparency, which directly contributed to the inclusion of the art market under the AML regime as part of the Fifth AML Directive.

Legal foundations of AML in the European Union and in Poland

AML obligations for the art market have their source in EU law, specifically in the V AML Directive (Directive (EU) 2018/843 of 30 May 2018). It was this legal act that, for the first time, explicitly expanded the catalogue of obliged entities to include those engaged in the trade of works of art, collectors’ items and antiques, as well as intermediaries operating in this area.

The directive was subsequently transposed into the Polish legal system through an amendment to the Act on Counteracting Money Laundering and Terrorist Financing. Since 2021, art galleries, auction houses and antique dealers operating in Poland have been formally classified as obliged entities and are subject to AML supervision.

This legal framework is complemented by the Sixth AML Directive, which does not so much expand the catalogue of entities as strengthen criminal and administrative liability for breaches and harmonise the definition of money laundering offences at the EU level.

Who exactly is subject to AML obligations in the art market?

The personal scope of AML regulations is broader than is often assumed. Obligations do not apply solely to large, international auction houses. They cover any individual or company conducting business activities involving the sale, purchase or intermediation of works of art, antiques or collectors’ items.

Importantly, neither the legal form of the activity nor its scale is decisive. A small gallery selling only a few objects per year may be subject to full AML obligations if it carries out a transaction that meets the value threshold specified in the legislation.

The transaction value threshold as the key determinant of AML obligations

Contrary to common belief, it is not the nature of the artwork or its age that determines AML obligations, but the value of the transaction. Both the EU directive and the Polish AML Act set a threshold of EUR 10,000 (or the equivalent in national currency), the exceeding of which triggers the obligation to apply customer due diligence measures.

This threshold applies not only to a single sale, but also to several linked transactions that together reach this value. This means that splitting payments or sales into several stages does not exempt an entity from AML obligations if, in reality, they form a single business relationship.

Many participants in the art market encounter the claim that AML regulations apply only to items older than 100 years. This belief has its origins in other legal regulations, but not in AML provisions.

The 100-year threshold appears primarily in customs and tax law, where it is used to define “antiques” for VAT, excise duty or customs classification purposes. However, it has no direct relevance for anti-money laundering obligations.

To eliminate any ambiguity as to which types of art-related transactions fall within the scope of AML regulations, the legislator refers to the definitions set out in Article 120(1)(1–3) of the Polish VAT Act. According to these provisions, AML obligations apply in particular to transactions involving:

• works of art, including, among others, paintings, painted textiles, original engravings, prints and lithographs, as well as sculptures and casts, regardless of the material from which they are made;
• collectors’ items, such as postage stamps and postmarks, numismatic collections, zoological and botanical collections, and other objects of a collectible nature;
• antiques, defined as items not covered by the above categories whose age exceeds 100 years.

In the AML context, the only relevant factors are that the subject of the transaction is a work of art, a collectors’ item or an antique in a broad sense, and that the transaction exceeds the applicable value threshold. The age of the object may, however, indirectly influence the risk assessment, for example in relation to provenance or the legality of the artwork’s origin.

AML and tax crime risks in the luxury goods market

The risks associated with money laundering are not limited to the art market alone but extend more broadly to the luxury goods sector as a whole. High-end watches, jewellery, precious stones, collectible cars and other premium assets share many of the same risk characteristics: high individual value, limited price transparency and ease of cross-border transfer. Supervisory authorities and tax administrations increasingly point out that the luxury goods market may be used not only for money laundering, but also for tax-related offences, including undervaluation of transactions, VAT evasion, fictitious exports or the use of intermediary entities based in low-tax jurisdictions. In practice, these mechanisms closely resemble those observed in the art market. The absence of standardised pricing, reliance on intermediaries and the cross-border nature of transactions make it more difficult to trace the flow of funds, which is why the luxury goods sector is attracting growing regulatory and enforcement attention in the AML and tax compliance context.

Customer identification and verification as the foundation of AML

One of the most important AML obligations in the art market is customer identification and verification, commonly referred to as KYC (Know Your Customer). This obligation involves establishing the identity of the natural or legal person participating in the transaction and, in the case of entities, also identifying the beneficial owner.

For galleries and auction houses, this means moving away from the practice of selling solely “by name” or based on personal relationships. The legislator requires that customer data be documented, kept up to date and made available in the event of an inspection.

Risk assessment and transaction monitoring

The KYC process is not limited to a one-off identification of the customer. A key element of the system is ongoing risk assessment and transaction monitoring. Art market entities should analyse, among other things, unusual purchasing patterns, payments made by third parties, or cross-border transactions lacking a clear economic justification.

Modern KYC solutions, such as those offered by IDENTT, support this process through advanced remote and automated customer identity verification based on artificial intelligence and biometrics, which can be conducted online or via video chats. These systems are capable of reading data from identity documents, performing biometric identity checks and liveness verification, as well as integrating with sanctions and PEP lists. This significantly increases the effectiveness of customer identification and reduces the risk of errors or fraud at the onboarding stage. As a result, art market entities can operate more efficiently while remaining compliant with AML requirements and avoiding potential legal and reputational risks.

Where a suspicious transaction is identified, there is an obligation to report it to the General Inspector of Financial Information. Failure to comply with this obligation may result in serious financial and reputational sanctions.

Documentation and liability for non-compliance

AML regulations also impose an obligation to retain documentation related to customer identification, risk assessment and the course of transactions. These documents must be available for a specified period, generally five years from the end of the business relationship.

The lack of appropriate documentation or its incompleteness is treated as a breach of the regulations, even if the transaction itself was not linked to a criminal offence. Supervisory authorities increasingly emphasise that AML is a procedural obligation, not merely a reaction to suspicious situations.

Summary

The inclusion of auction houses, art galleries and antique dealers within the AML regime is a permanent element of the regulatory landscape rather than a temporary trend. These regulations arise directly from EU anti-money laundering policy and have been clearly implemented into Polish law. For entities operating in the art market, this means the need to build transparent procedures, document customer relationships and actively manage risk. In practice, AML is becoming not only a legal requirement, but also an element of the professionalisation and credibility of the entire sector.