April 3rd, 2019
The Panama Papers – which were 11.5 million leaked files by a Panamanian law firm – revealed the ways offshore shell companies are used to store and transfer assets outside of legal regulations. The surprise that came with this leak was the revelation of the secrecy surrounding the sale and purchase of art. Specifically, the leak exposed the use of art sales to evade taxes and launder money.
In response to this, lawmakers are working on legislation to combat the art market’s potential for money laundering and terrorist financing. Last year the European Union passed the Fifth Money Laundering Directive which extends reporting requirements for banks to transactions involving works of art. The United States Congress proposed similar legislation called the Illicit Art and Antiquities Trafficking Prevention Act in the House last year. Art dealers have expressed concern over the burden these regulations will pose as well as their potential chilling effect on the purchase of art overall.
For an in depth look at this legislation and its potential effects, check out this article [1] by The New York Law Journal.
For more information on Castaybert PLLC’s experience in Art Law, click here [2].