Antiques: an unconventional money laundering tool

Antiques can be bought and sold without proper documentation or scrutiny, as they are often difficult to authenticate

Antiques are not just valued for their historical significance, but they have also become a popular tool for money laundering. Criminals have been using the antique market to convert their ill-gotten gains into legitimate assets for decades. The purchase and sale of antiques offer an opportunity to launder money without raising too many red flags. This has made it an attractive option for money launderers to move their money through the market undetected. Pakistan is home to a rich cultural heritage, with a history dating back thousands of years. However, this cultural heritage is under threat due to ongoing looting and trafficking of cultural objects. The illegal trade in cultural artifacts is a significant contributor to money laundering and terrorist financing. Stolen artifacts are often smuggled out of the country and sold on the black market to generate illegal profits, which can be used to fund other criminal activities such as drug trafficking and terrorism. The illegal trade in cultural artifacts is difficult to track and regulate, as the artifacts can be easily transported across international borders.

Antiques can be bought and sold without proper documentation or scrutiny, as they are often difficult to value and authenticate. Criminals take advantage of this loophole to move their illegal funds through the market. The lack of transparency in the antique market and the use of cash payments make it an ideal environment for money laundering. The high value of antiques also makes them an attractive option for criminals to convert their money into a legitimate asset. For example, a criminal might purchase an antique painting for a high value using illegal funds, and then sell it through a legitimate auction house or dealer, making it appear as if the funds were obtained legally. The sale proceeds can then be used to further launder the money or to finance criminal activities. Antiques have been identified as a potential tool for money laundering due to their high value and lack of transparency in the market. Various reports, including the European Union’s 2018 report on the assessment of the risks of money laundering and terrorist financing in the EU identified the art and antiquities market as a potential high-risk sector for money laundering. The report noted that antiques can be particularly vulnerable to money laundering due to the challenges in establishing their provenance and the lack of regulation in the sector. A 2019 report by the Financial Action Task Force (FATF) on the professional money laundering landscape in Europe found that high-value goods, including antiques, are commonly used for money laundering purposes. The report noted that antiques are particularly attractive to money launderers due to their high value and the potential for anonymity in transactions. A 2020 article in The Wall Street Journal reported on an investigation by the US Department of Justice into the use of antiques for money laundering. The investigation focused on a prominent New York art dealer who was accused of using the sale of antiques to launder money for a Chinese billionaire. The article highlighted the lack of transparency in the art and antiquities market and the challenges in tracing ownership and provenance as factors that make the market vulnerable to money laundering.

The looting of cultural sites in Pakistan is often linked to money laundering, making it a major concern for authorities. There have been several incidents of looting and destruction of cultural sites in Pakistan over the years, including theft of ancient artifacts from Taxila Museum, looting of the ancient city of Mohenjo-daro and smuggling of Gandhara sculptures. These incidents demonstrate the vulnerability of Pakistan’s cultural heritage to theft and destruction, and the need for greater efforts to protect and preserve cultural sites and artifacts. Pakistan needs to take several measures to combat the issue of antiques being misused for money laundering. The measures include regulations to monitor the antiquities market and prevent money laundering, training of enforcement agencies to identify and investigate cases of money laundering in the antiquities market and improving the use of technology to increase transparency in the market by creating a public register of ownership and provenance. Additionally, Pakistan should work with international organisations such as the FATF and UNESCO to promote the preservation of cultural heritage and prevent the illicit trade in antiques.

The use of antiques for money laundering cannot be ignored, although it is important to note that not all transactions involving antiques are indicative of money laundering. Many legitimate transactions occur in the antique market, and many collectors and dealers follow strict procedures to ensure their transactions are legal and above-board. Controlling the potential misuse of antiques for money laundering can be challenging, but there are several preventive measures and ways to control that can be implemented to help mitigate the risks. Firstly, conducting proper due diligence is crucial for those involved in the buying and selling of antiques to verify the authenticity and provenance of the objects. Secondly, effective Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) measures can be implemented by governments, regulators and the private sector to prevent money laundering in the art and antiquities market. This includes enhanced customer due diligence, transaction monitoring and reporting suspicious activities. Thirdly, increasing transparency in the market can help trace ownership and establish provenance. This can be achieved by implementing measures such as a public register of ownership and provenance. Fourthly, promoting industry best practices can help prevent money laundering. This includes establishing clear guidelines for due diligence and record-keeping and promoting the use of independent third-party experts to verify authenticity and provenance. Finally, encouraging education and awareness can help prevent the misuse of antiques for money laundering by promoting awareness of best practices and encouraging stakeholders to report suspicious activities. By implementing these measures, it may be possible to help mitigate the risks associated with the use of antiques for money laundering.

Published in The Express Tribune, April 25^th, 2023.

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