Deploying innovative technology could help combat the dark art of money laundering



There has been a significant improvement in Europe’s anti-money laundering defences but the battle against illicit funds is not yet over as criminals are always looking for vulnerabilities, an action that makes compliance professionals run into the dicey game. Traditionally, some companies were identified for their role in money movement and were termed “obliged entities” by European law. The status enables them to conduct stringent due diligence and risks assessments on the source of any transaction they are involved in and subsequently reporting suspicious deals to relevant authorities. The European Fourth Anti-Money Laundering Directive extended these due diligence responsibilities into a number of new sectors including law and real estate because criminals tend towards using professional services of such sectors. Art and antiques because of their easy style of movement and lack of no asset registers for it make it so easy to be a source to launder money. The market for art and antiques is composed of high-value goods being traded by high net worth individuals – with the market worth approximately $67 billion (€61.3 billion) in 2018, and the art wealth held by ultra-high-net-worth individuals forecast to rise to $2.7 trillion (€2.5 trillion) by 2026. This makes it simple for criminals to “place” large quantities of money into the financial system without as much as a question asked and given the volumes, criminals can and do hide in plain sight.

United Nations Security Council Resolution 2347 acknowledged that terrorist attacks around the world can get funded through the laundering of money through arts and criminals get filthily enriched with the illicit funds. Glaringly, Islamic State has been known to make use of such a money-laundering scheme, with a number of relics plundered from Iraq and Syria having been discovered in storage across Europe. Similarly, a number of early Van Gogh’s works were also discovered to be in the possession of a Camorra drug trafficker in Naples. Henceforth, any art deal of the equivalent of 10,000 euros or more will be subject to all relevant AML regulations. Also, trade of art and antiques must leverage technology in the sense that machine learning will be utilized to analyze the connections between the buyers and sellers alongside their intermediaries as there will be the creation of a digital register of possession which the world authorities can easily assess. The battle against money laundering is far from being won, but innovative technologies and stricter regulations have transformed AML processes. To truly combat the issue, it’s imperative that greater transparency is introduced into the sector. This will go some way towards ensuring a brighter future.