Online Scholarship

Editor’s Note: This article is part of a collaboration between the Harvard Art Law Organization and the Harvard International Law Journal.

*Monday Chinaecherem & **Danladi Christopher

INTRODUCTION 

Recently, the Art Gallery of Ontario showcased the ReBlink exhibit, where digital artist Alex Mayhew transformed classic artworks into interactive experiences through augmented reality (AR). Visitors could use their smartphones to see historical figures from paintings come to life, engaging in modern-day activities and interacting with their surroundings. This innovative approach not only captivated audiences but also prompted discussions about the evolving nature of art in the digital age. As AR gains traction in the art world, it simultaneously exposes the limitations of traditional intellectual property (IP) laws, which were designed for static and tangible works. The integration of digital content into physical spaces raises critical questions about ownership rights, consumer confusion, and the enforcement of trademark protections. For instance, when multiple artists collaborate on a virtual installation viewed through AR, who holds the rights to the resulting creation? Furthermore, as brands leverage AR to project their trademarks onto real-world objects, issues of unauthorized use and potential misrepresentation come to the fore.

This article will examine the integration of AR into the art world, the unique features that distinguish it from other digital technologies, and how existing IP laws apply—or fail to apply—to this emerging art form. The next section will explore the existing IP frameworks and analyze their applicability to AR-based artworks.

EXISTING IP FRAMEWORKS AND THEIR APPLICABILITY TO AR-BASED ARTWORKS IN THE UK AND US

United States

In the US, copyright laws under the Copyright Act of 1976 protect “original works of authorship, (§ 102)” including digital creations. For AR art, the digital elements may qualify for protection if they meet originality and fixation requirements. In Stern Electronics Inc. v. Kaufman 669 F.2d 852 (2d Cir. 1982), the court addressed the copyrightability of video games. The court ruled that video games qualify for copyright protection as audiovisual works, emphasizing that the combination of visual elements, sound, and interactivity can meet the originality requirement. Similarly, the court in Atari Games Corp. v. Oman 979 F. 2d. 242 (D.C. Cir. 1992) held that the visual displays of video games, even those with simple geometric shapes, can be protected under copyright law if they exhibit sufficient creativity. However, the interactive nature of AR—where audiences can manipulate or contribute to the artwork—complicates the determination of authorship.  Unlike traditional static art, AR art is dynamic and can change based on user interaction. This raises questions about whether users who alter the artwork have any claim to authorship, or if the original creator retains full control.

Since the U.S. Copyright Act does not clearly address this issue, it remains unclear how to assign authorship when users play an active role in shaping artwork’s content. As AR art continues to evolve, the law must adapt to these new challenges, and legal scholars are exploring ways to better define the scope of copyright protection for interactive works.

While copyright protects the creative aspects of AR, patents cover the technological innovations that make these experiences possible. The U.S. Patent Act establishes robust protections for technological innovations, making it a cornerstone of IP law in the country. Patents can be granted for inventions that meet three key criteria: they must be novel (§ 102), non-obvious (§103), and useful (§101). This framework has been instrumental in protecting AR hardware and software innovations, such as AR headsets, motion sensors, and immersive technology platforms. However, patents rarely extend to the creative expressions or artistic content embedded within AR experiences. This limitation arises because patents are designed to protect human inventions and processes, not creative works which are typically covered by copyright law or AR innovations.

The case of Alice Corp. v. CLS Bank International 573 U.S. 208 (2014)  is particularly relevant. The Supreme Court established a two-step test for determining patent eligibility, focusing on whether the invention is directed to an abstract idea and whether it includes an inventive concept sufficient to transform the abstract idea into a patent-eligible application. This decision has impacted software patents, including AR-related technologies, by making it harder to patent abstract ideas like algorithms without demonstrating their practical application.

Building on the foundational protections offered by copyright and patent laws, trademarks introduce another layer of complexity in the AR space. Whilst copyright safeguards creative expressions and patents secure technological innovations, trademarks focus on maintaining the integrity of brand identities. 

In the United States, trademarks are governed by the Lanham Act (Trademark Act of 1946), which protects brand identifiers such as logos, names, and service marks from misuse that could confuse consumers or harm a brand’s reputation. However, applying these protections in AR environments presents distinct challenges.  A notable challenge involves the unauthorized projection of trademarks into virtual spaces. For example, in the case of In re Diesel Power Gear, LLCNo. 1:2019cv09308 – Document 122 (S.D.N.Y. 2023), the misuse of trademarks in digital advertisements was scrutinized. Extending this to AR, an app could project the logo of a high-end fashion brand onto generic clothing in a virtual try-on experience. This misrepresentation could dilute the brand’s value, causing consumer confusion and devaluing the trademark’s exclusivity.

United Kingdom

The UK’s copyright framework is governed by the Copyright, Designs and Patents Act 1988. Like the US, it protects “original works”, including digital creations (section 1&3). For AR artworks, protection is afforded if they exhibit originality and are fixed in a tangible medium. However, the interactive nature of AR raises questions about authorship. The Nova Productions Ltd v Mazooma Games Ltd [2007] EWCA Civ 219  case supports the copyright ability of foundational elements in interactive works, but does not necessarily extend protection to all aspects of user interaction, such as transient or real-time outputs in AR applications.

Patents in the UK are regulated by the Patents Act 1977 aligned with the European Patent Convention (EPC). Innovations in AR hardware and software may be patentable if they meet the criteria of novelty(Section 2(1)), inventive step(Section 1(1)(b)), and industrial applicability(Section 1(1)(c)). For instance, AR technologies such as holographic devices or motion-capture systems could qualify for patents. However, like in the US, patents in the UK do not extend to creative expressions or artistic content created by Augmented Reality as seen in  Thaler v. Comptroller-General of Patents, Designs and Trade Marks [2023] UKSC 2021-0201  where the UK Supreme Court ruled that an artificial intelligence system cannot be named as an inventor under UK patent law, reaffirming that patents must be attributed to a natural person.

Trademark protection in the UK is governed by the Trade Marks Act 1994. Trademarks protect brand identifiers such as designs, letters, numerals, colours, sounds or the shape of goods or their packaging (Section 1(1)). In the context of AR, challenges include unauthorized use of trademarks in virtual spaces, leading to potential consumer confusion and/or brand dilution. A hypothetical example is an AR app projecting a well-known car brand’s logo onto a generic vehicle, creating a false association.

Comparatively, the frameworks of the two jurisdictions provide robust protections for traditional innovations but differ in application even though it can be implied that AR works may qualify if they meet certain requirements. The UK’s CDPA emphasizes originality but offers similar protections to the US Copyright Act for dynamic works. Patent frameworks in both jurisdictions align on criteria for protection, but the UK’s approach is closely tied to European standards, which may influence cross-border patent disputes. Trademark laws in both countries address unauthorized use but face challenges in AR environments where virtual misrepresentation is easier. Overall, while the legal foundations are similar, differences in interpretation and enforcement highlight the importance of tailoring strategies to each jurisdiction.

LEGAL ISSUES AND THE PRACTICAL WAY FORWARD

From the foregoing, it is evident that the integration of augmented reality into the art world has not only prompted a host of legal issues but has also occasioned critical ethical dilemmas that require consideration. One of the prime legal concerns is the applicability of existing intellectual property laws to AR art, which often blurs the lines between traditional copyright, trademark, and patent protections. Traditional IP laws were essentially designed for static and tangible works, making them ill-equipped to handle the dynamic and interactive nature of AR art. This precipitates the issue of real authorship in collaborative projects: if multiple artist contribute in an AR piece, who is said to own the rights to the final work? Also, as brands utilize AR to project their trademark in real world settings, questions of unauthorized use and potential misrepresentation become more prominent, leading to dispute over ownership and rights that current laws may not clearly resolve. Ethically, AR art upsurges significant challenges related to cultural appropriation and the representation of marginalized communities. As artists create immersive experiences that draw from various cultural backgrounds, there is a risk of exploiting these cultures without proper acknowledgement or respect. This can perpetuate stereotypes and lessen the authenticity of cultural expressions. The interactive nature of AR allows users to manipulate artworks, which consequently complicates ethical considerations about consent and integrity of the original work. 

Although addressing these issues maybe a daunting task, it is well within our capabilities. Finding effective solutions will necessitate deliberate and collective efforts from all parties involved. First, there is a pressing need for legislative reform that modernizes IP laws to better accommodate the unique characteristics of AR and art. Policy-makers should ruminate on creating specific frameworks that define authorship, ownership, and rights in collaborative digital environments. This could be done by establishing guidelines on how contributions are recognized and rights allocated among participants in AR projects. 

Strategic collaboration with international organizations focused on IP rights like the WIPO- can establish global standards for AR art that transcend national boundaries. This will help in enhancing cross-border enforcement issues and ensure that creators’ rights are protected regardless of jurisdiction. 

Additionally, scholastic initiatives, workshops, and forums can facilitate discussions on cultural sensitivity, and foster intelligent dialogue among artists, legal experts, and cultural representatives, with the aim of promoting awareness of IP rights and ethical considerations in AR art. Relevant stakeholders can further create a more informed community where artists are equipped with knowledge about their rights and responsibilities, and educate audiences on how to judiciously engage with AR art. 

CONCLUSION

The digital age has occasioned an intense change to how visual and performing artworks are created and displayed for viable purposes. While this shift poses substantial challenges to copyright concepts, new technologies have also opened an avenue for creative expression and expanded audience engagement. However, since existing laws often struggle to keep pace with digital advancements, updating and harmonizing IP regulations would balance and protect artists’ rights along with the benefits of an open internet and enhance a vibrant creative ecosystem while sustaining the cultural interest of society.

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* Monday Chinaecherem, University of Nigeria

** Danladi Christopher, University of Nigeria

Cover image credit 

Editor’s Note: This article is part of a collaboration between the Harvard Art Law Organization and the Harvard International Law Journal.

*Lucas Felipe Cabral de Aquino & **Marcílio Toscano Franca Filho

1 Introduction

The importance of religious cultural heritage has been recognized by several international organizations, such as UNESCO, through the 2010 Statement on the Protection of Religious Properties within the Framework of the World Heritage Convention; and the General Assembly of the United Nations, via Resolution n. 55/254. Besides speaking only to a specific religious community, these cultural goods are also relevant to humanity’s cultural identity.

However, despite of its relevance, it is difficult to find a proper conceptualization of religious cultural heritage, distinguishing it from the “secular” cultural heritage, which creates barriers to its effective protection and promotion, especially when, besides the traditional dangers to cultural heritage— such as depredation, theft, illicit traffic, poor preservation—new challenges arise from the consequences of climate change and the rise of religious intolerance. Given its intrinsic relation with religious practices and manifestations, international and domestic norms must delineate a special protection system able to consider its peculiarities. To privilege historic, artistic, and technical criteria when dealing with religious cultural heritage is to relegate to the background the distinctive mark of these goods: their sacredness and their relationship with the active life of the religion.

In the present work, we aim to present an initial debate towards the conceptualization of religious cultural heritage, understanding that it is closely dependent on the definition of variable ideas, such as what is “religion” and what is “sacred”. It is certain, however, that religious cultural heritage is composed of a diverse series of sacred places, monuments, buildings, works of art, rites, traditions, costumes, practices, and many other forms of tangible and intangible goods. 

2 Brief consideration on “cultural heritage”

Different legal diplomas give different meanings to “cultural heritage”. They can be complementary; or represent the transformations in the relationship between society and its heritage. Yet there always is a common point: the capacity to express cultural values while identifying their singular and distinctive characteristics (Lemme 2000, 610).

The shift from the idea of cultural property to a broader sense of cultural heritage allowed the cultural goods protected by the 1972 World Heritage Convention to be “understood as the inherited patrimony of culture, inclusive of the intangible heritage and living culture, and its relation to socio-economic aspects.” (Francioni 2020, 251) In this sense, article 1 of the 1972 Convention utilizes the “exceptional universal value” as the distinguishing mark of cultural heritage. Despite efforts made by the World Heritage Centre to clarify the criteria for inclusion on the World Heritage List, difficulties persist in including cultural heritage of Latin American, African, and Asian-Pacific countries,¹1 On the subject, see: Lucas Lixinski, International Heritage Law for Communities: Exclusion and Re-Imagination (Oxford: Oxford University Press, 2019). since much of its heritage is of intangible nature (Blake 2020, 347). This led to the elaboration of the 2003 Convention for the Safeguarding of the Intangible Cultural Heritage. Considering the peculiarities of intangible heritage—both in terms of its characteristics and of its protection—the 2003 Convention conceptualizes it as practices, representations, expressions, knowledge, and techniques recognized by a particular group, community or individual as an integral part of its cultural heritage. By doing so, the 2003 Convention also serves as a paradigm for the protection of cultural diversity, adopting a very broad concept capable of including different forms of “traditional” cultural manifestations. Thus, the UNESCO Conventions serve as International Cultural Heritage Law frameworks: one based on the “exceptionality” criteria; and another related to the peoples’ identity.

In this sense, Nathalie Heinich (2010/2011, 122-125), in an axiological analysis of cultural heritage, outlines five fundamental values that are immanent in the selection of goods that could receive such qualification: authenticity, antiquity, rarity, beauty, and meaning. Each of these values—except for rarity—can be associated to a broader “value register”: antiquity, to the “domestic” register, translating a notion of respect, belonging, trust, and concern with transmission; authenticity, to the “purifying” register, linked to integrity and connection with origins; meaning, to the “hermeneutic” register, implying the search for signification; and beauty to the “aesthetic” register, connected to notions of art. Heinich also states that the “value registers” can be separated into two “value realms”: the “singularity realm” and the “community realm.” Since rarity does not fit into any “value register”, it and its opposite, multiplicity, serve as “orthogonal values” that are capable of reinforcing or weakening other values. Therefore, a “singular realm” values what is rare, reflecting the notions of the 1972 Convention; while a “community realm” values the original artistic manifestations linked to the memory of a certain people, which its members are concerned with transmitting to future generations, reflecting the notions of the 2003 Convention. Thus, we understand that the values listed by the author—authenticity, antiquity, rarity, beauty, and meaning—are adequate for the analysis undertaken in the present work.

3 “Religiousness” from the point of view of Cultural Heritage Law

Religious cultural heritage can be understood as the set of tangible and intangible goods—taken individually or in groups—relevant for at least one religious group. Once its importance relies in its sacred function, distinguishing it from “secular” cultural heritage (Faria 2015, 595), its defining core is sacrality, given its exclusion from “profane” uses and its destination to public or private religious cult (Menis 1994, 35). Since there is a link between “religious cultural heritage” and “religious manifestation”, it is necessary to delineate the latter for the understanding of the former. 

From a theoretical intertwining between Peter Berger’s sociological theory of religion and Viktor Frankl’s existential analysis, Thiago Aquino (2023, 8) conceptualizes religion as being 

“a worldview, a nomos that expresses itself through a belief in an instance of cosmic evolution that would transcend the reality of ordinary experience and that is not subject to rational apprehension. The purpose of this belief would be to make the human being conscious, through the symbol referring to this greater reality, placating both the terror of emptiness and the restlessness about the enigmas and the final meaning of human existence.”²2 Originally: “uma cosmovisão, um nomos que se expressa por meio de uma crença em uma instância da evolução do cosmos que transcenderia a realidade da experiência ordinária e que não é passível de uma apreensão racional. A finalidade dessa crença seria a de tornar o ser humano consciente, por meio do símbolo referente a esta realidade maior, aplacando tanto o terror do vazio quanto as inquietações acerca dos enigmas e do sentido final da existência humana.”

The religious cultural heritage relates to manifestations that express a transcendental worldview imbued with symbolic meaning that guide individuals and provide a deeper understanding of existence. From this, three conclusions are derived: (i) not every good belonging to a religious group is a cultural good; (ii) not every cultural asset belonging to a religious group is cultural heritage; and (iii) not all cultural heritage belonging to a religious group is religious cultural heritage. At first glance, the third conclusion may seem contradictory, however it becomes necessary when not adopting self-definition as a defining mark of religiosity. Thus, only those assets that translate religiosity in combination with aesthetic and historical elements would be accepted as “religious cultural heritage” (Tsivolas 2014, 39-49). For example, if a religious order manages a museum containing a painting with no sacred content that was made by a major historical artist, this work of art may be cultural heritage, but not religious cultural heritage.

Moreover, the religious character does not result in the exclusive enjoyment by the religious community. As said by Maria Cornu (2022, 50):

“These assets of collective interest, when designated as elements of cultural heritage, are more closely aligned with extra-commerciality. They are public things, in the sense that they belong to everyone, beyond the idea of being objects of property. This constitutes a collective heritage, and public cultural spaces such as museums are particularly appropriate ‘enclaves’ for housing these things outside of commerce.”³3 Originally: “Ces biens d’intérêt collectif, lorsqu’ils sont désignés comme éléments du patrimoine culturel, sont davantage postés du côté de l’extra-commercialité. Ils sont des choses publiques, en ce sens qu’ils appartiennent à tous, au-delà de l’idée qu’ils sont des objets de propriété. C’est un patrimoine collectif, et les lieux publics culturels tels que les musées sont une ‘enclave’ particulièrement appropriée pour accueillir ces choses hors commerce.”

In that sense, Theodosios Tsivolas (2014, 40-43) argues that religious cultural heritage should be glimpsed from the trinomial faith-memory-aesthetics. Besides being a testimony of sacredness, religious cultural heritage is also a symbol of religious memory, translating a complex physiognomy that deciphers changes in religious practices over the centuries. Conserving a religious cultural asset has as a direct consequence the maintenance of distinct layers referring to the unique moments in the society’s identity construction. The plethora of religious beliefs and dogmas translated in the symbols incorporated into a given cultural assets have an ambivalent function: it is essential for its devotional purposes, since they are manifestations of the values and norms sustained by religion; while also allowing the “secular enjoyment of religious beauty”, since religions have historically served as a source of inspiration and support for art (Tsivolas 2014, 43-46).

4 Sacrality as an immanent value of the religious cultural heritage 

International Law seems to recognize, even in tangible heritage, intangible elements that deserve protection. In doing so, Cultural Heritage Law is not only concerned with the cultural object or the manifestation itself, but with the relationship between the cultural heritage and the people’s response to it (Tsivolas 2017, 20-22). Therefore, by protecting a certain religious cultural heritage, whether tangible or intangible, one is protecting the transcendental and symbolic worldview that guides the individuals of a certain religious group. In other words, one protects the sacredness of that good and the way in which individuals of a given religious community relate to it. 

Thus, it is possible to affirm that, in addition to the values listed above—authenticity, antiquity, rarity, beauty, and meaning—sacredness is an immanent value of the protection of religious cultural heritage. This leads to the following problem: how can Law define what is sacred? We do not aim to make a taxonomy of sacred objects, practices, and sites, since sacredness manifests itself in different ways among different religions. However, some considerations are necessary.

The “sacred” is the term by which the individuals tries to translate what is most essential in their religious experience (Ries 2017, 71). According to Mircea Eliade (Eliade1959, 10), the simplest definition of the sacred is precisely its opposition to the profane, which, according to the author, allows the individual to become aware of the existence of the former. The fact that the sacred manifests itself to the human being is called “hierophany”, which includes in its meaning the entire religious phenomenon (Ries 2017, 72). From the inherent scope of hierophany derives its heterogeneity, which translates the broad scope of tangible and intangible goods that can be considered religious cultural heritage, since “each of these categories has its own morphology that reveals, at the same time, a modality of the sacred and a specific situation of the human being in relation to the sacred” (Ries 2017, 73).⁴4 Originally: “cada uma dessas categorias possui uma morfologia própria que revela, ao mesmo tempo, uma modalidade do sagrado e uma situação específica do ser humano em relação ao sagrado.” If the simplest of objects comes to be regarded as a hierophany, even though it retains its former physical properties, it is transubstantiated in the eyes of the religious person into something that reveals a connection with that particular cosmological view (Eliade 1959, 12). As Eliade (1959, 12) states, “the sacred tree, the sacred stone are not adored as stone or tree; they are worshipped precisely because they are hierophanies, because they show something that is no longer stone or tree but the sacred, the ganz andere.”

Eliade also distinguishes three elements within the structure of hierophany: (i) the natural object; (ii) the transcendental reality; and (iii) the mediating object clothed with sacredness. From the latter, emerges a symbol that acts as a “mediator between the unattainable transcendence of God and man”, so that “the Sacred symbolically transfigures the reality of the world of man” (Greco 2009, 61).

Therefore, when we argue that sacredness is an immanent value of religious cultural heritage, we aim to affirm that, allied to the protection of what is valued, before a community, for its authenticity, antiquity, rarity, beauty, and meaning,⁵5 We chose to differentiate between the “meaning” value and the “sacred” value because we believe that the former translates the historical perspective contained in the religious cultural heritage; and the second, the properly religious perspective of the cultural good. it also protects what is most essential for a given religious community: the relationship with the transcendental figure.

5 Final considerations

From what has been previously discussed, we can conclude that one cannot simply define religious cultural heritage as the heritage pertinent to a specific religious group, given that the notion of “religion” is mostly variable. Thus, we propose the idea that religious cultural heritage is related to manifestations that express a transcendental worldview imbued with symbolic meaning that guide individuals, while providing a deeper understanding of existence, based on Aquino’s analysis of Berger’s and Frankl’s theories. 

This leads to the understanding that not all cultural heritage belonging to a religious group can be classified as religious cultural heritage, and that the special protection given to this cultural heritage seeks to protect the good itself, its sacredness, and the way in which individuals of a given religious community relate to it. A move towards this direction would lead Cultural Heritage Law to recognize a plethora of tangible and intangible religious goods of marginalized religious denominations, besides leading to a better preservation status of the already recognized religious cultural heritage.

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The present paper was written with the support of the Coordenação de Aperfeiçoamento de Pessoal de Nível Superior – Brasil (CAPES) (Brazilian Coordination for the Improvement of Higher Education Personnel).

* Lucas Felipe Cabral de Aquino

Master’s student in the Postgraduate Program in Legal Sciences at the Federal University of Paraíba (PPGCJ-UFPB). Bachelor of Laws from the Federal University of Paraíba (2018-2022). Researcher at the International Laboratory for Research in Transjuridicality (LABIRINT).

**Marcílio Toscano Franca Filho

Arbitrator in the World Intellectual Property Organization Arbitration and Mediation Center (WIPO, Geneva/Singapore), in the Court of Arbitration for Art (CAfA) and in the Latin American Arbitration and Mediation Center (LatCam, Asunción). Former arbitrator in the MERCOSUR Tribunal (Asunción). Professor of Public Law at the Federal University of Paraíba (UFPB, Brazil) and Prosecutor General at the Prosecution Office at the Audit Court of Paraíba (MPC, Brazil), where he chairs the Taskforce on Cultural Heritage Protection. Member of the UNIDROIT Working Group on Art Collections. Visiting Professor in Turin, Pisa and Ghent, Research Fellow at the Collegio Carlo Alberto (CCA, Turin) and Calouste Gulbenkian Fellow at the European University Institute (EUI, Florence). Member of the Executive Council, and the International Law Commission on Cultural Heritage, International Law Association (London, United Kingdom). Member of TIAMSA – the International Art Market Studies Association; the Instituto Hispano-Luso-Americano de Direito Internacional (IHLADI); the Istituto Nazionale per il Diritto Dell’arte e dei Beni Culturali (INDAC, Italy), and the 1995 UNIDROIT Convention Academic Project (Rome, Italy).

Cover image credit 

Editor’s Note: This article is part of a collaboration between the Harvard Art Law Organization and the Harvard International Law Journal.

*Juan Carlos Portilla

Introduction

The succinct response to the question posed is affirmative. The Financial Action Task Force (“FATF”), the global money laundering and terrorist financing watchdog, has yet to establish international standards that would incorporate the global art market into its designated non-financial businesses and professions (“DNFBPs”) framework.

The financial sector (banking, securities broker-dealers, fintech, and virtual assets) and DNFBPs (casinos, real estate agents, lawyers, notaries, accountants, trust service providers, and dealers in precious metals and stones) are governed by stringent anti-money laundering (“AML”) regulations. Nevertheless, the art market operates under relatively lax anti-financial crime regulations and oversight across various jurisdictions globally. The lack of a clear international framework from FATF has hindered both nations and art market participants from establishing compliance regulations and policies. Specifically, this absence of guidance affects the implementation of “Know Your Customer” protocols—which prohibit financial institutions from opening accounts anonymously or under a false name, due diligence obligations, transparency regarding beneficial ownership of legal entities involved in art transactions, and the reporting of suspicious activities to relevant authorities.

The absence of a comprehensive global regime regulating the art market renders it particularly susceptible to transnational financial crime, including money laundering, terrorist financing, and proliferation financing.  Such a regime should not only incorporate know your customer and due diligence obligations, transparency regarding beneficial ownership of legal entities involved in art deals, and the reporting of suspicious activity, but also the prohibition of engaging in business transactions with sanctioned entities.  

The European Union’s Fifth Anti-Money Laundering Directive includes anti-money laundering obligations to art brokers, auction houses, and storage providers, particularly for transactions exceeding €10,000. The proposed Illicit Art and Antiquities Prevention Act in the U.S. Congress would also require art and antiquities dealers to implement AML programs. However, there remains an urgent need for FATF to address the deficiencies in international anti-financial crime legislation to prevent art market money laundering. The objective for FATF should be to encourage its member states worldwide to implement AML programs specifically tailored to participants in the art market. In the future, the FATF mutual evaluation process should incorporate an assessment to determine whether member states comply with an FATF global standard aimed at combating transnational financial crime within the global art market.

To advocate for a new FAFT global standard aimed at safeguarding the art market from transnational financial crime, it is crucial to address several key issues: the role of FAFT in combating transnational financial crime; an understanding of transnational financial crime itself; its prevalence within the global art market; the increasing incidence of money laundering operations in the art sector; the implications of anonymity and secrecy in art transactions; and the necessity of establishing a comprehensive data system that can guide international lawmakers in tackling art-related money laundering more effectively. The remainer of this article will delineate these issues. 

The Role of FAFT and its Framework in Combating Transnational Financial Crime

 FATF is not a treaty-based international organization but rather a task force composed of member states. FAFT was established in 1989 at the initiative of the G7 to formulate policies aimed at combating money laundering. In 2001, its mandate was broadened to include terrorist financing. FATF is hosted by the Organization for Economic Cooperation and Development (“OECD”) in Paris. FAFT issues international standards, also referred to as the FAFT 40 Recommendations, on combating money laundering, the financing of terrorism, and proliferation financing. 

FAFT 40 Recommendations are categorized as soft law by scholars. International legislators often adopt the soft law approach, as a design choice. Soft law offers several advantages over treaty law, including greater flexibility for states to cope with complex issues, such as money laundering, and lower negotiation costs. FATF strives to cultivate the political will necessary for enacting national legislative reforms in these critical areas. FATF empowers national authorities to effectively pursue illicit funds associated with drug trafficking, the illegal arms trade, cyber fraud, and other serious offenses. To date, over 200 countries and jurisdictions have committed to implementing the FATF’s standards as part of a coordinated global initiative aimed at preventing transnational financial crime.

Understanding Transnational Financial Crime

Transnational financial crimes include money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction. Transnational crimes occur across borders and are highly profitable for organized crime. These include art crime, securities fraud, tax evasion, corruption, cybercrime, and illicit cryptocurrency use. Additionally, transnational organized crime is involved in money laundering, terrorist financing, and proliferation financing. The focal point of this conflict lies within the international financial system, as organized crime relies on it to launder the profits from their crimes. The emergence of transnational financial crime is largely due to globalization and deregulation of financial markets, leading to unprecedent cross-border money transactions involving individuals, companies, and financial institutions. 

 Money laundering is a significant concern for international policymakers. Money laundering is the process by which criminals disguise and legitimize their financial gains from illegal activities, transforming “dirty money” into “clean” funds. Key tactics involve maintaining anonymity and secrecy to avoid scrutiny of the money’s origins. Criminals obscure the source of their profits, alter the form of the money, or move it to tax haven jurisdictions to avoid detection. FATF and the United Nations (“UN”) have implemented global regulations to address the issue of money laundering. Nonetheless, international policymakers like FATF have struggled to combat money laundering in the art market. Interventions are necessary to close regulatory gaps due to several concerns: The increasing money laundering activities among art market participants, anonymity in art transactions, reliance on shell companies, and the urgent need for a comprehensive data system to aid global lawmakers in tackling art-related money laundering effectively.

Art Market Money Laundering

 Money launderers found a niche within the art market. Criminal enterprises have realized the potential of the art market as a vehicle for money laundering due to its unique characteristics and vulnerabilities. The Financial Crime Academy indicates that only 25-30% of art transactions occur through banks, highlighting the prevalence of cash transactions and difficulties in tracing funds. A major vulnerability within the art market stems from the high level of anonymity and secrecy that often accompanies art transactions. Common schemes include shell companies that hide true ownership of artworks and facilitate illegal financial activities. The absence of regulation and oversight in the art market exacerbates its susceptibility to various risks, with estimates suggesting that over $3 billion in art market transactions are linked to suspicious activities each year.

Methods for laundering money through art and antiques include the use of artworks as collateral for loans, the role of freeports, and participating in anonymous purchases and resales. White-collar criminals are often driven to engage in anonymous transactions involving the purchase and resale of art as a means of laundering illicit funds. The Beaufort case exemplifies this contemporary and discreet method of money laundering within the art market. In the past, Beaufort Securities, a firm based in Mauritius and accused of fraud, stock manipulation, and money laundering, successfully laundered their illicit gains by depositing money under fake identities in offshore banks and gradually integrating these funds into the global banking system. However, their biggest challenge was disguising these illegal profits as legitimate income. Matthew Green, who grew up in a family devoted to fine arts, with his father owning renowned galleries, became the crucial link that opened the art market for Beaufort Securities to cleanse their tainted money. 

At 51, Green was poised to inherit the family business, but in late 2017, he became entangled with Beaufort Securities. He was then approached by the Beaufort conspirators, one of whom was in fact an undercover U.S. federal agent who had infiltrated Beaufort. Green reportedly agreed to receive £6.7 million (around $9 million at that time) derived from securities fraud in return for a 1965 Picasso, titled Personnages. Green would create fraudulent ownership documents indicating that the artwork had been sold, while actually keeping the Picasso securely stored. Later on, he would feign a purchase of the painting back from his co-conspirators at a reduced price, pocketing 5 to 10 percent of the laundered funds for himself.

The methods employed by Green and others involved in the Picasso scheme are still relatively easy to replicate Green exploited a regulatory loophole that legislators in the U.S and Europe are actively working to close. Unlike financial institutions, lawyers, casinos, currency exchange services, and even precious metals dealers, auction houses and art sellers are not required to report large cash transactions to any governing body. Dealers can keep both buyers’ and sellers’ anonymity. Unlike US businesses managing large sums, they are not required to report suspicious money origins to the U.S. Treasury Department.

Data System to Guide International Lawmakers in Addressing Art-Related Money Laundering Effectively

The legitimate global art market was valued at approximately $67.4 billion in 2018, while the underground art market, involving thefts and forgeries, may generate up to $6 billion annually, according to the United Nations Office on Drugs and Crime (“UNODC”). Furthermore, a 2009 UNODC report estimated that global money laundering amounted to 2-5 percent of the world’s GDP, equating to $800 billion – $2 trillion in current U.S. dollars annually. The data referenced above originates from the years 2009 and 2018, respectively. UNODC acknowledged that due to the clandestine nature of money-laundering, it is challenging to estimate the total amount of money that goes through the laundering cycle. Outdated information falls short in equipping policymakers with the necessary insights to issue international regulation against art-related money laundering. Consequently, utilizing data is essential in addressing art-related money laundering. The international community needs universally accepted frameworks that leverage data to assess the effectiveness of efforts against art-related money laundering.

Essential Components of a Global Standard to Combat Transnational Financial Crime in the Art Market

The fundamental elements of an international standard aimed at combating money laundering in the art market should encompass customer due diligence (“CDD”) measures, record-keeping requirements, and the reporting of suspicious activities. Art market participants should apply CDD when forming business relationships, suspecting illicit activities, or questioning prior customer identification information. The necessary CDD measures may include: (a) identifying the customer and confirming their identity through reliable, independent source documents, data, or information; and (b) identifying the beneficial owner and taking reasonable steps to verify their identity. For legal entities and arrangements, this involves art market participants comprehending the client’s ownership and control structure. Moreover, art market participants should maintain detailed records of all transactions, both domestic and international, to respond to authorities’ information requests. These records should allow for the reconstruction of transactions, including currency types and amounts, to aid in prosecuting criminal activities. Finally, if a participant in the art market suspects, or has reasonable grounds to suspect, that funds may be derived from criminal activities or are associated with terrorist financing related to such activities, it should be mandated by law to promptly report these suspicions to the financial intelligence unit in the jurisdiction of their domicile.

Conclusion

To summarize, this article proposes a new FATF global standard to protect the art market from transnational financial crime. While the financial sector and DNFBP face strict AML regulations, the art market lacks strong oversight, making it vulnerable to money laundering. The absence of a clear international framework from FATF hinders compliance in the art market, impacting KYC protocols, due diligence, transparency in ownership, and suspicious activity reporting. In short, FATF needs to integrate the global art market into its framework for DNFBPs.

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* Juan Carlos Portilla, International Financial Law Professor, Sabana Law School

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Editor’s Note: This article is part of a collaboration between the Harvard Art Law Organization and the Harvard International Law Journal.

*Ronald Alcala

In 2021, when the Taliban recaptured control of Afghanistan, a small museum in Kabul quietly shuttered its doors. The museum contained no famous artifacts or works of art, and it had never hosted an exhibition of national or international acclaim. Rather, the Afghanistan Memory Home Museum displayed modest items once owned by ordinary people. It was dedicated to memorializing the lives of war victims by sharing their stories through objects they once owned. Grouped together in “memory boxes,” these items—a school notebook, a pair of sandals, a child’s drawings—were a testament to lives altered or lost as a result of the ongoing violence in Afghanistan.

When the Taliban entered the city, the museum’s organizers hid or sent away all of the museum’s artifacts. Some were hastily buried in volunteers’ yards while others were smuggled abroad for safekeeping. Today, the museum no longer exists in physical form, but it has reemerged online. Visitors can view the museum’s “memory boxes” in a digital gallery along with descriptions of each item and a narrative of the victim’s story. The digitized artifacts have kept the museum’s mission alive in a way that has become increasingly common in contemporary society: through the use of digital reproductions.

This article explores the value of digital reproductions and the significance of protecting them as cultural heritage. The article examines the law’s emphasis on original creations and argues that preferencing original works unduly burdens the aims of cultural heritage preservation. In some cases, digital reproductions can encode cultural memory as effectively as original creations, and the law should avoid biasing the protection of original works when the preservation of a digital copy can achieve the same result. All digital material, whether born digital or created to reproduce a physical object, should be independently evaluated for its cultural heritage value and protected accordingly.

A Preference for Originals

UNESCO’s adoption of the Charter on the Preservation of Digital Heritage in 2003 marked an important milestone in the protection of digital cultural heritage. The charter recognized that recorded knowledge and creative expression were increasingly “produced, distributed, accessed and maintained in digital form,” leading to the creation of a “new legacy—the digital heritage.” Older agreements that did not explicitly address digital works have now also been interpreted in light of emerging digital technologies. Among these is the 1954 Hague Cultural Property Convention, adopted in the aftermath of the Second World War to protect cultural heritage from damage or destruction in future armed conflicts. As interpreted by the international group of experts who produced the Tallinn Manual 2.0 on the International Law Applicable to Cyber Operations, the convention’s requirements to respect and protect cultural property extend to “cultural property that may be affected by cyber operations or that is located in cyberspace.” In particular, parties to an armed conflict “are prohibited from using digital cultural property for military purposes.” 

The protection of digital heritage, however, comes with a significant caveat. Both UNESCO’s Charter on the Preservation of Digital Heritage and the Tallinn Manual 2.0 express a preference for original works—either “born digital” material or a “digital surrogate”—and prioritize their protection over other digital materials. Article 7 of the Charter on the Preservation of Digital Heritage suggests that the main criteria for deciding what digital materials to keep include “their significance and lasting cultural, scientific, evidential or other value.” Article 7 then declares, without further explanation, that “‘[b]orn digital’ materials should clearly be given priority.” The Tallinn Manual 2.0 also preferences original works. Its commentary to Rule 142, which addresses cultural property, explains that the protection of digital cultural property “only applies to digital copies or versions where the original is either inaccessible or has been destroyed, and where the number of digital copies that can be made is limited.”

While a preference for original items may be understandable, this bias is worth reconsidering in an age of digital reproduction. At a time when photography and film were the disruptive reproduction technologies of the day, the German philosopher Walter Benjamin explored the allure of originals in his essay “The Work of Art in the Age of Mechanical Reproduction.” Benjamin explained that originals possessed qualities of “authenticity” and “aura” that could never be recaptured in a copy, even if the copy represents “the most perfect reproduction” of a work. Authenticity and aura were a reflection of a work’s existence in time and space and, therefore, were inapplicable to copies produced. Still, Benjamin questioned the value of authenticity and aura in an age of mechanical reproduction, “from a photographic negative,” he noted, “one can make any number of prints; to ask for the ‘authentic’ print makes no sense.” 

Digital reproduction has only magnified this argument. One commentator suggested, “the work of art in the age of digital reproduction is physically and formally chameleon. There is no clear conceptual distinction now between original and reproduction in virtually any medium based in film, electronics, or telecommunications.” A growing list of projects lends support to this conclusion. In one example, a high-quality reproduction of Paolo Veronese’s Wedding at Cana was created to replace the original painting in Venice’s San Giorgio Maggiore. Napoleon ordered the painting’s removal and transfer to the Louvre in 1797. To replace it, the art conservation firm Factum Arte produced a high-resolution photographic rendering of the work and even recreated the raised seams rejoining sections of the painting that had been cut apart when Napoleon’s soldiers transported it to France. 

Presented in the painting’s original setting, the near-perfect copy is striking. It reproduces what Veronese envisioned when he composed the work for the space centuries ago. One art critic described it as the “third miracle at Cana,” placing it after only Veronese’s original masterwork and the biblical miracle itself. The sociologists Bruno Latour and Adam Lowe suggested that “the aura of the original had migrated” from Paris to Venice, while another scholar described the transfer as flowing from the original work to “an otherwise perfect reproduction with only one shortcoming: being a facsimile.” These reactions are telling. If reproductions can possess this power and even at times feel more authentic than the originals, shouldn’t they also be entitled to independent protection, regardless of the condition or whereabouts of the originals themselves? 

The Cultural Value of Reproductions

The law has been reluctant to extend unqualified protection to copies and facsimiles because they are viewed as inauthentic and inferior. This reflexive criticism persists despite the ability of contemporary technologies to encode essentially the same cultural memory that heritage law seeks to preserve. Public response to a proposal to replace the Parthenon Marbles in the British Museum with high-quality reproductions is illustrative. The proposal would substitute the existing works with nearly identical copies carved by robots from detailed digital scans. The project would even use Pentelic marble sourced from the same quarry as the original sculptures. 

Critics, however, contend that the iron flecks in the marble “would inevitably fail to match the original” and that viewing the copies would not hold the same “magic” as viewing objects crafted by hand centuries ago. In reply, the Executive Director of the Institute for Digital Archaeology, the group overseeing the project, has argued that “the Parthenon sculptures are a far cry from the ‘real thing,’ at least if the real thing is defined as something that approximates the actual appearance of the work-product of Phidias & Co.” Phidias oversaw the Parthenon’s sculptural program, including the creation of the disputed marbles in the British Museum, in the 5th century BCE.

Viewing a high-quality reproduction with the knowledge that the archetype exists someplace else could be unsettling. Latour and Lowe indicated that the experience could provoke “terrible cognitive dissonance.” Current interpretations of the law anticipate this dissonance and consequently express a preference for originals. Perhaps, however, it is time to revisit the purpose and importance of copies. In an age of digital reproduction, when material can be reproduced with exacting detail, we should adjust our expectations and evaluate copies on their own merit as potential encoders and communicators of cultural memory.

Digital Surrogates and Cultural Memory

The commentary to the Tallinn Manual 2.0 supports protecting digital surrogates as cultural property in armed conflict, but only in cases “where the original is either inaccessible or has been destroyed, and where the number of digital copies that can be made is limited.” To illustrate this, the Tallinn Manual 2.0 provides the example of an “extremely high-resolution” digital image of the Mona Lisa. The commentary indicates that this digital surrogate “might, and in the event of the destruction of the original Mona Lisa would, qualify as cultural property.” On the other hand, “due to the high speed and low cost of digital reproduction, once such a digital image has been replicated and widely downloaded, no single digital copy of the artwork would be protected by this rule.”

Applying the Tallinn Manual 2.0’s rationale to the digital facsimile of the Wedding at Cana would lead to the following result. (Coincidentally, the original painting currently shares a gallery with the Mona Lisa in the Louvre.) First, the digital information used to create the image installed in San Giorgio Maggiore is not entitled to independent cultural property protection. Because the physical original continues to exist and is not otherwise inaccessible, the digital copy is not afforded protection under Rule 142 of the Tallinn Manual 2.0. Moreover, even if the original were to be destroyed or to become inaccessible, the digital surrogate still would not necessarily be entitled to protection. The Tallinn Manual 2.0 insists that if an image has also been widely downloaded, no single digital copy would be granted protection. (Another potentially interesting question, which is outside the scope of this article, is whether the same rule would apply if the original were destroyed or became inaccessible but a singular, high-quality reproduction, like the physical recreation of Veronese’s painting, continued to exist.)

In contrast, the protection of born-digital material is not subject to the same “widely downloaded” restriction as digital surrogates. The Tallinn Manual 2.0 does not explicitly distinguish between born-digital material and digital surrogates, but it does hint at a difference of treatment between the two. It contrasts “objects that are created and stored on a computing device and therefore only exist in digital form” from copies “of which a physical manifestation exists (or has existed).” The “widely downloaded” restriction apparently does not apply to born-digital material, such as musical scores, digital films, and scientific data.

Neither the Tallinn Manual 2.0 nor UNESCO’s Charter on the Preservation of Digital Heritage explain why born digital works should benefit from a more favorable and extensive protective regime than other digital heritage material. Presumably, it is because reproductions are considered less significant than original material. On the other hand, if a goal of cultural heritage preservation is to safeguard cultural memory for posterity, then potentially all material that accomplishes that purpose has cultural value. The preamble of the Charter on the Preservation of Digital Heritage itself declares that “the disappearance of heritage in whatever form constitutes an impoverishment of the heritage of all nations” (emphasis added). In recognition that digital reproductions can preserve heritage, it may be time to decouple the protection of digital surrogates from their physical avatars. 

The digital “memory boxes” of the Afghanistan Memory Home Museum and the facsimile of Veronese’s Wedding at Cana attest to the power of reproductions. As repositories and transmitters of cultural information, digital surrogates can be valuable safekeepers of cultural memory. In a world increasingly cultivated and experienced online, linking the protection of digital surrogates to physical objects may no longer make much sense. The law should acknowledge that in some cases, digital surrogates, like born digital material, might merit independent protection as digital cultural heritage.

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*Ronald Alcala is the Academy Professor and Associate Dean for Strategy & Initiatives, United States Military Academy at West Point. The views expressed here are the view of the author and do not necessarily reflect those of the United States Military Academy, the United States Army, the U.S. Department of Defense, or any other department or agency of the United States government.

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