Bridging Copyright and Cultural Heritage: Art Preservation Through the Moral Right to Integrity

Apr 1, 2025 | HALO x ILJ Collaboration, Online Scholarship

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

*Lorenza Giordani

I. INTRODUCTION

The interplay between copyright and cultural heritage law is often overlooked, yet it becomes crucial in the realm of art preservation. This is especially relevant when considering the moral right to integrity and the phenomenon of art destruction. These issues transcend a purely European context, offering a rich foundation for rethinking art preservation from an intergenerational perspective.

Originating in Europe, moral rights, including the right to integrity, have since become a global norm under the Berne Convention, which introduced them in 1928. Despite initial skepticism, particularly in common law jurisdictions, these rights are now widely recognized and embedded in international copyright frameworks. This article explores how the moral right to integrity, particularly in cases of visual art destruction, can align with the future application of cultural heritage law to protect communal cultural assets.

According to Article 6 bis of the Berne Convention, the moral right to integrity empowers artists to shield their works from distortion, mutilation, or modifications that harm their honour or reputation. Meanwhile, cultural heritage law seeks to preserve objects of significant cultural value. This article argues that the moral right to integrity can act as a provisional mechanism for cultural heritage protection, bridging individual rights with broader communal preservation efforts.

II. THE MORAL RIGHT TO INTEGRITY

Moral rights, originating in the European continental legal tradition,  reflect the deep bond between an artist and their creation. Among these rights, the right to integrity allows creators to object to modifications—broadly intended—that are prejudicial to their honour or reputation. Enshrined in Article 6 bis of the Berne Convention and recognized internationally, the right to integrity’s application and enforcement vary widely across jurisdictions, offering little explicit guidance on the issue of destruction.

The destruction of a work raises complex questions about the balance between the individualistic focus of moral rights and the broader interests of society. While the harm directly affects the artist, it also extends to the cultural fabric of the community, suggesting a more expansive role for the right to integrity. However, in practice, legal disputes are confined to the artist and the artwork’s owner, leaving the community without a cause of action. By contrast, cultural heritage law assumes a communal benefit in the protection of cultural assets, explicitly recognizing the societal value of preservation.

For this reason, I argue that the community’s interest should be integral to interpreting the moral right to integrity, particularly in cases of art destruction. Reconceptualizing the right in this way would better reflect the dual significance of visual art as both personal expression and shared cultural heritage.

III. VISUAL ART AND THE UNIQUE CHALLENGES OF DESTRUCTION

Visual art’s physicality and unique embodiment of cultural values make it particularly vulnerable to destruction, positioning it at the center of discussions on cultural preservation. Unlike literary or music works, visual art’s value often hinges on its singular physical manifestation, challenging the established copyright principle of the distinction between chorpus mechanicum and mistycum. The destruction of a painting, sculpture, or installation can result in the irreversible loss of cultural and historical significance.

Legal ambiguity further complicates this issue. While the Berne Convention grants authors the right to object to modifications prejudicial to their honour or reputation, it does not explicitly address destruction. Some judicial interpretations suggest that destroying a work—rendering it non-existent—cannot harm an artist’s reputation, as no altered message can be conveyed to the public, unlike in cases of modification. Besides proving to be fallacious, this argument further neglects the collective cultural loss that occurs when a significant work of art is destroyed.

Two critiques arise regarding the use of the moral right to integrity as a mechanism for cultural preservation. First, not all works protected under the right to integrity will necessarily qualify as cultural heritage in the future, raising questions about the criteria for identifying cultural worthiness. Second, the enforcement of the right to integrity could reflect an artist’s interests in ways that conflict with community values. While the first critique involves establishing intergenerational criteria for cultural significance, the second critique highlights a valid tension that warrants further exploration.

To address these concerns, I propose reconceptualizing the moral right to integrity as a “collective-but-individually-embodied” right by acknowledging a seed of community interest in an individual right. This framework preserves the individualistic foundations of the right while recognizing the community’s stake in visual art, which derives meaning and value through public engagement and societal impact. By preventing destruction, the moral right to integrity safeguards works that might one day be recognized as cultural heritage, ensuring the preservation of significant artistic and historical contributions for future generations.

The theoretical foundation of the moral right to integrity highlights its role in protecting both individual artistic expression and communal cultural preservation. Yet, enforcement varies widely, particularly in cases of visual art destruction. While the Berne Convention provides a global framework, its lack of clear guidance on destruction leads to differing interpretations. This inconsistency complicates the protection of artistic integrity and the balance with cultural heritage goals. The next section examines how judicial approaches in Europe remain fragmented, with varied legal practices across countries. Comparisons with non-European systems reveal different ways these challenges are handled, emphasizing the difficulty of aligning individual and cultural rights in a cohesive way.

IV. THE DESTRUCTION ISSUE IN JUDICIAL APPLICATION: A MASSIVE FRAGMENTATION

Despite the widespread protection of the moral right to integrity across European countries, significant fragmentation persists in its scope and application, largely due to the lack of harmonization within the European Union’s copyright framework. While the EU has unified certain economic aspects of copyright law, moral rights remain outside its purview, leaving individual member states to develop their own interpretations and implementations. Notably, major jurisdictions such as France, Germany, Spain, and Italy do not explicitly extend the moral right to integrity to include the prevention of destruction. As a result, copyright disputes over the destruction of artworks are primarily resolved through case law, which reflects a mosaic of interpretations rooted in differing historical, cultural, and legal traditions.

Among European jurisdictions, Germany offers an instructive example of a more detailed and relatively recent jurisprudence. German courts engage in a nuanced balancing of the moral right to artistic integrity against the property rights of owners, employing a framework grounded in constitutional principles. The Federal Supreme Court has emphasized the importance of balancing the freedom of artistic expression, protected under Article 5 of the Basic Law, with the protection of property under Article 14. Courts consider key factors such as the originality, uniqueness, and intended purpose of the artwork—distinguishing between free artistic creations and applied art with functional purposes. When artworks are integrated into structures, practical considerations such as construction needs or redevelopment plans often weigh heavily against the artist’s rights. Additional considerations include whether the artist had opportunities to preserve their work through alternative measures, such as creating copies or facilitating reinstallation.

In contrast, certain non-European jurisdictions provide more explicit protections against the destruction of artworks, offering valuable lessons for balancing competing rights. For example, despite its historical resistance to moral rights and delayed adoption of the Berne Convention, the United States provides limited but significant safeguards under the Visual Artists Rights Act (VARA). VARA grants visual artists the right to prevent destruction of their works if the artwork is deemed to be of “recognized stature.” While this criterion may seem elusive, it has been clarified through case law, such as the landmark Carter v. Helmsley-Spear (71 F.3d 77 (2d Cir. 1995)) decision, which established that “recognized stature” involves both merit and recognition by experts, the artistic community, or society at large. This approach integrates community standards into the legal framework, reflecting a broader conception of cultural preservation.

Switzerland presents an alternative model, focusing on procedural obligations for owners under Article 15 of its copyright law. When the destruction of a copyrighted work is foreseen, the owner must offer the work back to the artist or, if this is not feasible, ensure the artist can create a suitable reproduction. This procedural mechanism has two notable advantages: it simplifies judicial assessments by providing clear obligations for owners and increases compliance by outlining a straightforward process. However, its individualistic focus—excluding community involvement in evaluating the artwork’s significance—limits its broader applicability, particularly for works of community importance.

Together, the U.S. and Swiss approaches highlight the potential for copyright law to address cultural heritage concerns through flexible interpretations of the moral right to integrity. The U.S. model emphasizes the role of community standards in preserving artworks of societal importance, while the Swiss system underscores the value of clear procedural safeguards. These models provide complementary perspectives on balancing artistic integrity with property rights, offering potential pathways for harmonizing international approaches to the destruction of art. 

V. THE MORAL RIGHT TO INTEGRITY AS A SAFEGUARD FOR CULTURAL HERITAGE IN TRANSITION

The argument proposed in this article explores how the moral right to integrity can serve as interim protection for cultural heritage, especially concerning the destruction of visual art. Interpreting this moral right collectively bridges copyright and cultural heritage law, ensuring significant artworks may be preserved until they can be formally recognized under heritage statutes.

Firstly, the irreversible nature of destruction—and sometimes modification—means that once a work is lost, it cannot be recovered. While it’s unrealistic to save every piece of art from destruction, society benefits from preserving significant works to assess their cultural value in the future. This is not a call for blanket preservation, but an appeal for a forward-thinking approach in cases involving potential destruction.

Secondly, there is a timing gap between the application of copyright law and cultural heritage law. Cultural heritage laws often take effect after considerable time has passed and consensus has formed about an artwork’s importance. From a private law perspective, moral rights help ensure that enough art is preserved during this interim period.

Moreover, evaluating an artwork’s cultural significance under heritage law is not fundamentally different from assessing the moral right to integrity in cases of destruction, especially when considering the collective aspect of moral rights. The main difference is time: recognizing cultural value is clearly easier in hindsight. This retrospective acknowledgment explains concerns over the potential destruction of important artworks not yet protected by heritage laws.

Understanding the moral right of integrity as both individual and collective can reconnect copyright and cultural heritage law. While cultural heritage belongs to the community, copyright is a form of private property. These systems express and control value differently: the market for copyright and community relationships for cultural heritage. This tension can be addressed by integrating the community into enforcement through moral rights.

However, this relies on the assumption that authors and the public have converging interests, which is not always the case. Critics argue that moral rights laws presume a uniform public interest favouring preservation, which may not reflect reality. While moral rights may support preservation, they must be balanced against conflicting rights using fair criteria, emphasizing the need to consider these standards carefully.

VI. CONCLUSION

This article explores the key arguments for balancing the moral right to integrity with conflicting property rights over a single copyrighted work, particularly in the context of visual art destruction. Visual art presents unique challenges: it often operates outside copyright-driven markets, merges the intangible work with its tangible medium, and grapples with the ambiguous concept of destruction, which is intrinsically vague. The conflict between the moral right to integrity and ownership rights is a classic exercise in balancing, where no single right takes precedence, and fairness depends on well-defined criteria. This issue offers an opportunity to reflect on the broader relationship between copyright law and cultural heritage law. Despite their shared goal of protecting creative and cultural output, these fields are rarely connected in practice. The destruction of art, particularly in relation to the moral right to integrity, could serve as a useful lens for exploring this necessary relationship. Furthermore, in its broader sense, copyright law would benefit from moving away from a strictly individualistic interpretation and reconnecting with its cultural and community roots.

* Lorenza Giordani is a PhD student at Bocconi University (Italy).

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Beyond Green and Social: Embracing Cultural Sustainability in Public Procurement Through the Lens of Traditional Knowledge

Apr 1, 2025 | HALO x ILJ Collaboration, Online Scholarship

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

*Dr. Carol Cravero

This article explores how public procurement can foster traditional knowledge (TK)-sensitive solutions by investigating the role of legal mechanisms such as intellectual property (IP) tools, contractual provisions, and tailored regulatory frameworks in facilitating their inclusion. Drawing on concrete yet limited examples around the world, such as New Zealand’s Progressive Procurement Policy, the article advocates for public procurement frameworks that recognize and incorporate diverse knowledge systems – particularly traditional ones – in advancing sustainable development and promoting cultural diversity.

Public procurement refers to the purchasing activities carried out by governments and public entities, which are essential for fulfilling their mandates. These activities encompass infrastructure development, the acquisition of goods, and the procurement of both physical and intellectual services from the private sector. Beyond being merely a series of economic transactions, public procurement can contribute to advancing broader societal goals.

In particular, governments can use public procurement as a strategic tool to promote sustainable development, fostering a greener and more equitable future. Identified as green or social, sustainable public procurement can contribute to a wide array of sustainable development goals, for example reducing greenhouse gas emissions, minimizing waste and pollution, encouraging sustainable resource use, advancing more equitable society, making progress on gender balance, promoting healthy and reliable food, ensuring fair labor practices, supporting local businesses, and enhancing community well-being through social initiatives.

Under the category of social public procurement, some governments, such as Canada, the US, New Zealand, and Australia, have developed strategies and policies to empower Indigenous communities through equitable and inclusive mechanisms ranging from set-aside contracts to preference schemes, with the aim of directing procurement opportunities toward them. Through set-aside contracts, procuring entities restrict the procurement eligibility criteria to Indigenous businesses only, ensuring that procurement contracts for goods, works or services are awarded exclusively to this category. On the other hand, preference schemes allow all bidders to participate while granting an advantage to certain bidder groups during the bid evaluation stage. In this context, Indigenous businesses may receive additional points, increasing their chances of winning even if their bids are not the lowest-priced or highest-ranked. Additionally, governments may also set annual targets for the number of contracts to be awarded to Indigenous businesses at the national level, as exemplified by New Zealand’s approach with Māori businesses and Canada’s mandatory targets for Indigenous businesses.

Set-aside contracts, preference mechanisms, and targets reflect a political commitment to promoting inclusivity in public procurement. This inclusiveness is typically intended to increase the participation of Indigenous businesses in public procurement, foster supplier diversity, and may even result in a higher number of contracts awarded to them. Ultimately, this type of social procurement aims to enhance the economic well-being of Indigenous businesses – and indirectly that of their families and communities. However, it is uncertain to what extent these interventions align with and genuinely reflect the values underpinning the lives and identities of Indigenous communities.

This issue becomes even more evident when focusing on public procurement that generates direct or indirect impacts on Indigenous communities but is awarded to non-Indigenous bidders. In such scenarios, poorly framed public procurement risks overlooking or inadequately addressing the needs, values, and traditions of Indigenous populations, potentially resulting in unintended consequences that undermine sustainability and cultural preservation. 

At the basis of Indigenous identities and values, traditional knowledge reflects the ancestral practices, culture heritage, knowhow, and understanding of life in all its facets, including the local environment where communities have lived for generations. Traditional knowledge is not only a crucial element of the daily lives of Indigenous communities, but it can also offer valuable responses to global issues, such as climate change and food insecurity, reducing challenges in such areas as land management, conservation, and scientific, technological and medical research. Rooted in centuries of lived experience and deep understanding of local ecosystems, traditional knowledge provides sustainable, context-specific and long-term solutions that may complement scientific approaches. For example, Indigenous agricultural practices often promote biodiversity and soil conservation, which may contribute to climate resilience. Similarly, traditional land management techniques can help mitigate the impacts of deforestation and desertification.

Although it is uncommon for procuring entities to integrate or thoroughly consider traditional knowledge throughout the public procurement cycle, the incorporation of Indigenous values in the design and implementation phases is not entirely disregarded worldwide. 

For example, the so-called New Zealand’s “Progressive Procurement Policy”, introduced in 2020, aims to align public procurement with Māori values, by combining elements of social procurement, supplier diversity, Indigenous procurement, and wellbeing measures. According to the Progressive Procurement Supplier Guide (2021) released by the Hastings District Council, engaging Māori communities from the very beginning of the procurement process contributes to delivering sustainable outcomes that reflect the principles of care for the Earth Mother (Papatuanuku), creating opportunities for both Māori design influence and Māori guidance on natural resource management principles. The Supplier Guide also identifies a non-exhaustive list of examples illustrating how suppliers can concretely incorporate Māori culture, values and perspectives into public procurement. These include the use of Māori language (Te Reo Māori) and customs, traditions, and protocols that guide Māori society (Tikanga Māori) “in communications, traditional protocols, blessing of sites, Māori design influence, dedicated Māori cultural groups, cultural heritage education”. To this end, suppliers are required to declare how they, along with prime contractors and subcontractors (as applicable), intend to respect Māori culture, values, and perspectives in the execution of procurement contracts.

In such cases, the protection of Māori values is assessed during the evaluation of bids or proposals, and subsequently monitored through the contract terms on the basis of the evidence provided by suppliers during the implementation phase. Evidence may encompass details on where and how Te Reo was used throughout the contract; dates and number of employees provided with training on Te Reo or Māori protocols during the contract; the number of traditional Māori ceremonies performed throughout the project procurement and approximate number of attendees; and evidence on how Māori design was incorporated (if applicable).

Despite the limited literature supporting this claim, it is reasonable to consider that, ideally, Indigenous traditional knowledge can also be protected through the legal tools available within the realm of intellectual property (IP). Indigenous communities may face challenges such as false claims of ownership by non-members, the offensive use of their traditional knowledge; false allegations discrediting their traditional items or services; and the absence of appropriate and just compensation for the commercialization of their traditional knowledge and cultural expressions by third parties. In this context, IP may provide mechanisms to prevent third parties from misusing or exploiting traditional items and cultural expressions without proper recognition of their origin or the authorization of Indigenous communities (defensive protection). Along with the requirement for prior free and informed consent from Indigenous communities – a prerequisite for non-members to access and potentially use traditional knowledge and cultural expressions – IP legal frameworks may also enable Indigenous communities to take action against misconduct and to seek compensation when necessary (positive protection).

Specific IP clauses can be integrated into procurement contracts to ensure that the IP rights of Indigenous communities are respected. These clauses can stipulate that any use of traditional knowledge or cultural expressions in the procurement process must be agreed upon and appropriately compensated. In other instances, confidentiality agreements can be used to protect Indigenous communities from unauthorized use or exploitation of sensitive information.

However, an enduring question that has been debated for years is whether conventional IP mechanisms (e.g., patents, copyrights, geographical indications, and trademarks) are the most suitable tools for effectively safeguarding traditional knowledge, given its distinctive characteristics. In particular, traditional knowledge does not usually refer to new or innovative creations but rather to traditional heritage that has been passed down through several generations, within a timeframe that is not easily determinable and is usually longer than the duration of most IP rights. Additionally, the transmission of traditional knowledge is typically based on interpersonal interactions, memory, and practice, rather than formal documentation. This informality often makes it difficult to record, track, and verify traditional knowledge for legal or commercial purposes. Furthermore, the paradigm of individual (or corporate) ownership does not fit traditional knowledge, given its ancestral, transgenerational and collective nature, except in cases where cultural expressions can be unequivocally attributed to specific individuals within these communities. Another barrier is the cost of applying (and enforcing) conventional IP rights as well as the complex and technical language of applications. Conventional IP mechanisms, such as copyrights and patents, offer protection only for a limited period, after which the protected work enters the public domain. This outcome is not ideal for traditional knowledge, as it is deeply embedded in the identity of the Indigenous communities from which it originates. Its preservation and continued use within these communities are highly valued by their members. 

Inclusion in databases or registration can prevent third parties from obtaining patents, copyrights or other IP rights based on traditional knowledge and traditional works that are already documented or registered. For example, the Indian Traditional Knowledge Digital Library (TKDL) was developed to safeguard traditional medical knowledge and prevent its misuse or misappropriation. This database was “conceptualized to overcome the language and format barrier by systematically and scientifically converting and structuring the available contents of the ancient texts […] into five international languages, namely, English, Japanese, French, German and Spanish”. The TKDL is complemented by specific non-disclosure and access agreements with several patent offices, including IP Australia, the Canadian Intellectual Property Office, the Chilean Patent Office, the EU Patent Office, the German Patent Office, the India Patent Office, the Japan Patent Office, the UK Patent and Trademark Office and the US Patent and Trademark Office. In the field of genetic resources, the possibility of establishing information systems (such as databases), in consultation with Indigenous peoples and local communities, was recently established by the WIPO Treaty on Intellectual Property, Genetic Resources and Associated Traditional Knowledge, entered into force on 24 May 2024. The fifteen contracting parties agreed to require patent applicants whose claimed inventions are based on traditional knowledge associated with genetic resources to disclose the Indigenous peoples or local communities, as applicable, that provided the traditional knowledge.

Some governments may disagree on using conventional IP mechanisms, and may prefer adopting sui generis measures or developing a sui generis, specialized legal framework. According to the New Zealand’s IP laws (Acts), registering trademarks or geographical indications or granting patents that would be considered offensive by Māori or contrary to Māori values is prohibited. To this end, Māori Advisory Committees, which are composed of members with a deep understanding of mātauranga Māori and tikanga Māori (Māori cultural protocols), are established to advise on whether an offence or contradiction may occur. Another example is the Panama’s sui generis Law on Special Intellectual Property Regime on Indigenous Communities’ Collective Rights enacted on 26 June 2000 with the objective of protecting traditional dress (Molas) produced by Kuna craftswomen as well as music, dance and major Indigenous handicrafts such as tagua nut carvings, hand-beaded chaquira necklaces and chacara woven bags. Under this Law, authenticity labels can also be issued to guarantee the authenticity of traditional items and thus enabling discerning buyers to pay a fair price for a genuine product.

According to a second school of thought, certain conventional IP tools do not require any adaptation to safeguard the rights of holders of traditional knowledge and cultural expressions. As suggested by WIPO experts, collective and certification marks and geographical indications are particularly “well adapted to the protection and marketing of handicrafts and, at the same time, to the concepts of the collectivity and collective rights that are at the heart of many Indigenous societies”. For example, when the characteristics of traditional products are attributable to their territorial origin, geographical indications can also indirectly play a role in preventing the commercialization of counterfeit products by enforcing the proper use of protected names, ensuring that products bearing those names meet the established criteria, and discouraging the export or import of fake Indigenous goods. On the other hand, collective marks can be used to distinguish the origin or other shared characteristics of traditional items provided by different Indigenous enterprises that use the collective mark under the control of its owner, typically an association of enterprises.

In conclusion, while much of the discourse on sustainable public procurement has centered on its environmental and social dimensions, a crucial yet underexplored aspect appears to be the integration of traditional knowledge. Alongside inclusive and preferential mechanisms, public procurement can serve as a powerful tool for promoting cultural sustainability, in addition to green and social goals, by incorporating traditional knowledge, cultural heritage, and the values of Indigenous communities. To achieve this, procuring entities must be equipped with the knowledge and capacity to identify and systematically apply the appropriate legal mechanisms to ensure that a culturally-based approach is genuinely embraced throughout the procurement process. Whether this can be effectively ensured through IP tools, contractual provisions, or tailored regulatory frameworks requires further study. This article serves as an initial exploration, paving the way for future research on the subject.

* Dr. Carol Cravero is International Public Procurement Law Expert.

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Expanding U.S. Anti-Money Laundering Laws to the Art Market: A Proposal for a New Regulatory Framework

Mar 12, 2025 | HALO x ILJ Collaboration, Online Scholarship

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

*Sarah Jane Kim

Introduction

The threat of money laundering remains a major global issue, with up to $2 trillion laundered annually—around 5% of global gross domestic product. The United States has adopted a framework to combat the risk of money laundering, the centerpiece of which is the Bank Secrecy Act (BSA). The BSA requires financial institutions, such as banks, money services businesses, and casinos, to take steps to prevent, detect, and report money laundering activity. While comprehensive, the BSA does not apply to all entities that could facilitate money laundering in the United States, notably excluding the art market.

The global art market’s features make it highly susceptible to money laundering, such as the easy transport of high-value items; use of third-party intermediaries to transact and store art; subjective nature of valuing art; culture of secrecy and lack of transparency embedded in the art industry; and the continuing rise of private sales in the art market. The $65 billion U.S. art market is particularly vulnerable as it is “the largest, legal unregulated industry in the United States.”

Despite its efforts to expand the BSA’s application to additional entities, the United States has opted against regulating the art market, relying instead on voluntary self-policing. The lack of U.S. Anti-Money Laundering (AML) regulation in this industry is especially concerning, considering that the United States is the leading market in art sales worldwide. Given the threat, the United States should immediately take steps to extend AML regulations to core art market participants (AMPs), including dealers, galleries, and auction houses. 

This article explores U.S. AML regulatory efforts toward the art market, compares them to the frameworks of the United Kingdom (U.K.) and European Union (E.U.), and highlights the issue with the U.S. art market’s self-regulation. The article then presents a path forward for U.S. AML efforts with a proposal for more effective and practical regulation. 

U.S. AML Framework and Recent Proposals

In the United States, the BSA mandates that financial institutions implement AML programs, according to a five-pillar framework: (1) designation of a compliance officer; (2)  development of internal AML policies; (3) proper employee training programs; (4) regular, independent, risk-based audits; and (5) implementation of customer due diligence (CDD). The BSA’s definition of “financial institution” has expanded over time to cover non-bank entities such as the real estate industry and pawnbrokers, but excludes participants in the high-value art market despite several attempts. Ultimately, the United States has extended AML regulations only to the antiquities market, while the EU’s AML laws include the art market as a regulated sector. 

Attempts to apply the BSA to the art market include the Illicit Art and Antiquities Trafficking Prevention Act (IAATP), introduced in May 2018. It would have amended the BSA to classify “dealers in art or antiquities” as a “financial institution,” thereby obligating art dealers to comply with AML measures, including Know Your Client (KYC) checks and reporting cash transactions over $10,000. However, the law did not pass. It faced opposition from many art professionals due to its burdensome requirements, especially on smaller players such as antique and ancient art dealers, including the low thresholds it had proposed for Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs), as well as its imposition on the privacy of art collectors.

In January 2021, Congress passed the Anti-Money Laundering Act of 2020 (AMLA 2020) as part of the 2021 National Defense Authorization Act (NDAA). Section 6110 of the AMLA 2020 extended BSA provisions to antiquities dealers but not the art market.¹1 In response to FinCEN’s question on how an antiquity is distinct from a work of art, Christie’s provides a useful answer: “Antiquities generally refers to man-made archaeological material and cultural artifacts considered integral to a country’s history or heritage (e.g., statuary in stone, bronze and terracotta; vases in pottery, bronze, stone or glass) created from ‘antiquity,’ which usually refers to the ancient past before the Middle Ages (no later than 450 A.D.).” The AMLA 2020 directed FinCEN to examine the high-value art trade to determine whether the BSA provisions should also cover AMPs. While a 2022 study by the Department of Treasury acknowledged risks of abuse in the high-value art market, it recommended prioritizing other sectors such as real estate and nonfinancial gatekeepers before turning to the art market.

In July 2022, the U.S. House of Representatives passed an amendment to the 2023 NDAA, the Establishing New Authorities for Business Laundering and Enabling Risks to Security Act (ENABLERS Act). It would have imposed AML requirements on art dealers and auction houses and expanded the BSA’s KYC and CDD requirements to include lawyers, investment advisors, and other intermediary entities. However, the Senate rejected the ENABLERS Act following significant pushback from the American Bar Association and other industry representatives. Consequently, U.S. law is still without an effective AML framework for the art industry.

Regulation of the Art Market in the E.U. and U.K.

Unlike the United States, the E.U. and U.K. were much more aggressive and successful in extending AML regulations to AMPs. In 2020, the E.U. enacted its Fifth Anti-Money Laundering Directive (5AMLD), which extended AML regulations to include art auction houses and dealers.

Despite the U.K.’s exit from the E.U. in January 2020, the U.K. proceeded to apply the 5AMLD in its AML efforts. The U.K. offers both a criminal law approach and preventative approach to combat money laundering. For the former, the U.K. enacted its Proceeds of Crime Act in 2002, which made it a crime for any entity, including art market participants, to be involved in arranging or acquiring property through unlawful conduct or money laundering. For the latter, the U.K. enforced the Money Laundering, Terrorist Financing, and Transfer of Funds Regulations in 2017 (MLR 2017), which expanded the country’s AML directives and was updated to specifically cover “art market participants” who transact amounts exceeding €10,000. The MLR 2017 required even accountants, legal professionals, high-value dealers, and the like to establish risk-based protocols. In the U.K., AML compliance obligations include risk assessments, training requirements, CDD checks, enhanced checks for parties involved with politically exposed persons (PEPs) and high-risk third countries, and maintaining records. The U.K.’s AML approach is even more stringent than that of the E.U. and provides a more cohesive regulatory framework.

Analysis

Concerning the art market, U.S. AML laws lag far behind those of the E.U. and the U.K. This is problematic considering that the U.S. is the largest global art market with a share of 42%, surpassing China at 19% and the U.K. at 17%. Instead of taking real action to prevent money laundering in the art market, the United States has opted to allow market participants to follow a voluntary system that is mere window dressing for the problem. As a result, the United States remains an attractive target for global criminals to launder their criminal proceeds. 

Senate Subcommittee Investigations: Voluntary AML Compliance Programs

The U.S. Senate’s Permanent Subcommittee of Investigations (the “Subcommittee”) in 2020 investigated the status and effectiveness of the voluntary AML programs at the four major auction houses—Sotheby’s, Christie’s, Phillips, and Bonhams. While the houses do not publish their AML policies, the Subcommittee investigated their voluntary programs and published its findings (2020 Senate Report). The 2020 Senate Report found that the high-value art market presents an attractive vehicle for money laundering and sanctions evasion and recommended imposing regulatory compliance requirements on U.S. art dealers and auction houses. The Subcommittee concluded that the voluntary AML programs maintained by the major auction houses were not effective in identifying the true ultimate beneficial owner (UBO) as they generally performed CDD on the art advisor/dealer and other intermediaries rather than on UBOs—and even then, any CDD may be voluntary.

A Path Forward

The BSA should be extended to art dealers, auction houses, and other art intermediaries with annual gross sales exceeding $5 million, henceforth identified as high-value art market participants (HVAMPs). The following are recommendations for how such AMPs should operate under BSA/AML compliance regulations per the BSA’s five-pillar framework. Drawing from the definitions established in the ENABLERS Act and 5AMLD, AMPs should be defined as “persons or entities engaged in the trade of works of art — specifically including dealers, advisors, consultants, custodians, galleries, auction houses, and museums — or persons or entities acting as an intermediary in the sale or purchase of works of art.”

BSA Compliance Recommendations for the High-Value Art Market

1. All HVAMPs must have a designated compliance officer.
2. All HVAMPs must develop internal, written AML policies. Major auction houses with established programs must publish their AML policies. The policies must include clear procedures for filing SARs with FinCEN. An HVAMP receiving an unsatisfactory client response on the source of funds or UBO identity should be required to file a SAR. 
3. Employee training programs must be documented and updated to reflect current market trends. All current and incoming employees must be trained to detect suspicious activity. 
4. Independent, risk-based audits should be conducted periodically to assess weaknesses in a company’s BSA/AML compliance program. 
5. Mandatory CDD should be implemented. This rule requires HVAMPs to identify and verify beneficial ownership identities, allowing HVAMPs to assess whether they are dealing with legitimate or suspicious buyers. HVAMPs should be required to file SARs with FinCEN upon encountering a potentially suspicious UBO customer. As in the E.U. and U.K. and proposed in the ENABLERS Act, CDD should apply to UBO customers who wish to purchase an artwork valued above $10,000.

Considerations

As discussed, previous efforts to apply the BSA to the art market failed due to strong resistance from the art world, especially from smaller market players and peripheral AMPs like lawyers and investment advisors. Therefore, these recommendations attempt to mitigate these shortcomings.

First, mandated AML programs should apply only to core AMPs meeting a realistic and practical monetary threshold. While E.U. and U.K. laws mandate compliance on all those dealing in works of art exceeding €10,000, this requirement will likely cover nearly all small U.S. art dealers and galleries. FinCEN interim rules implementing section 352 of the USA PATRIOT ACT require dealers in precious stones and jewels to establish AML programs if they both purchased and sold at least $50,000 of covered goods in the preceding year. However, this threshold is still too low for the high-value art market.²2 “The high-value art market is of greatest concern in the industry from a money laundering perspective but represents a limited portion of the broader art market. According to the UBS and Art Basel report, in 2020, less than 20 percent of works sold internationally by art dealers had values over $50,000. Approximately 10 percent of sales by auction houses internationally in 2020 had values over $50,000, but those sales accounted for over 85 percent of the total sales value” (2022 Treasury Study, 3). If these thresholds are imposed, the costs associated with maintaining an AML program could be crushing on small mom-and-pop art dealers and galleries. A more reasonable approach would be to set the monetary threshold at $5 million in annual gross sales, thus preventing undue burdens on smaller dealers while still targeting high-value, money laundering–prone transactions.³3 This dollar threshold is intended to ensure that, like the AML programs for precious jewel dealers, the rule only applies to persons engaged in the business of buying and selling a significant amount of works, rather than to small businesses, occasional “dealers,” and persons dealing in such items for hobby purposes. Moreover, the $5 million threshold has precedent in the Corporate Transparency Act of 2024, which requires a reporting entity to have more than $5 million in gross receipts or sales on their prior year’s federal income tax return.

Potential criminals may still attempt to launder their illicit proceeds through dealers under the $5 million benchmark. However, this threshold would create less resistance from smaller AMPs while still addressing the target high-value art market, where players regularly transact above $5 million. If criminals attempt to launder money through a large number of lower-valued artworks with the smaller AMPs, such attempts could become extremely burdensome, and these smaller dealers could eventually achieve sales revenue of $5 million or more—in which case they would become subject to the AML laws. FinCEN could adjust thresholds further if laundering persists but still should avoid imposing undue financial and administrative burdens on smaller AMPs. 

Incidentally, backlash may arise over the differing thresholds for the art market versus the antiquities market, whose dealers are subject to AML obligations if trading antiquities valued at $10,000 or more. However, despite physical or categorical similarities between the two, the art market should be treated distinctively as it handles significantly higher volumes and values than the antiquities trade.⁴4 See supra note 1. The global antiquities trade is worth an estimated $300–400 million a year. For more, see the following reports: Fighting Bogus Information About the Art Market; The Current State of the Antiquities Trade: An Art Dealer’s Perspective; The Art Basel & UBS Global Art Market Report 2024.

Conclusion

The U.S. art industry is vulnerable to money laundering due to the lack of effective AML regulations. Congress has thus far failed to enact effective AML laws applicable to the art industry due to strong opposition from certain lobbying groups and smaller AMPs lacking resources to adopt AML compliance programs. While the E.U. and U.K. enforce stringent AML regulations, the United States, as the leader of the global art market, must catch up. This oversight creates a major loophole in the global enforcement of AML initiatives in this important industry. Implementing a regulatory framework involving large-scale U.S. art market players can strengthen AML efforts without overburdening smaller participants.

* Sarah Jane Kim is a legal research associate and former arts professional. She holds a B.A. in Art History from Georgetown University and M.A. in Art History from Columbia University, where she specialized in 19th-century French art. She has worked at the Metropolitan Museum of Art, Smithsonian, Phillips, and helped teach the Art History survey at Barnard College and Columbia University. She will be entering law school this fall.

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Preservation or Protection? The Intellectual Property Debate Surrounding Traditional Cultural Expressions

Mar 12, 2025 | HALO x ILJ Collaboration, Online Scholarship

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

*Gunjan Arora

Introduction: 

The United Nations Declaration on the Rights of Indigenous Peoples (2007) acknowledges equal human rights of indigenous peoples against cultural discrimination. Under Article 31.1 of the Resolution, indigenous people have been accorded the right to “maintain, control, protect and develop…intellectual property over [their] cultural heritage, traditional knowledge and traditional cultural expressions.” This includes manifestations of their sciences, technologies and cultures, including oral traditions, literatures, designs, sports and traditional games and visual and performing arts among others. Further, Article 31.2 enjoins the respective States with an obligation to undertake effective measures which enable indigenous people to exercise their rights successfully. 

The World Intellectual Property Organization (1985) defines “Traditional Cultural Expressions” and/or “Expressions of Folklore” as tangible and intangible forms in which traditional knowledge and cultures are expressed, communicated, or manifested. These include traditional music, performances, narratives, names and symbols, designs, and architectural forms. These are said to be included as part of the broader connotation of Traditional Knowledge. Traditional Cultural Expressions (TCEs) mirror the identity and heritage of indigenous communities. They are integral to their socio-cultural identities, embodying know-how and skills, thereby transmitting core values and beliefs. Their preservation is key to the promotion of creativity, enhanced cultural diversity, and the preservation of their cultural heritage. 

According to WIPO, the several ‘uses’ of TCEs may include commercial, industrial, customary, household, public health uses as traditional medicine and fair use for research and educational purposes. Currently, there is no specific clause under any international instrument that seeks to provide any form of protection, preservation, or conservation of these rights belonging to      traditional communities. Although there is a prolonged and ongoing debate on the need to preserve or protect the Traditional Cultural Expressions belonging to an indigenous community as a community based right, such indigenous communities per se have yet not been given an opportunity to exercise their discretion with respect to the manner in which TCEs are to be exploited. This article seeks to explore the idea of preserving TCEs as a separate form of IP under a sui generis system. Adopting a sui generis system for protection of rights of TCEs and associated communities would consider identifying TCEs as an independent property right, capable of being enforced as an IP. TCEs can be recognized as a unique form of expression which can be a subject matter of protection under IP. They may be preserved as a community right based on the principle of access and benefit sharing. This would ensure that the communities cannot be subjected any form of unwarranted commercial exploitation or misappropriation. 

Traditional Cultural Expressions: Crafted by WIPO

The discussion surrounding TCEs is not a recent one. For the past two decades, the WIPO has been working towards granting an intellectual property rights status to TCEs. According to Vargas (2022), the need to protect TCEs as an intellectual property for indigenous communities is justified on three specific grounds: value-based, harm-based, and traditional IP-based. The value-based justification is built on the idea that TCEs are both economically and intrinsically valuable for the community to which it belongs and hence, such communities must be duly rewarded. The harm-based justification assumes that the cultural extinction, devaluation and desecration could be the result of lack of protection. Further, the traditional IP-based justification equates TCEs with any other form of work protected under IP and is based on incentivizing creativity, granting autonomy, right to self-determination, and collective ownership of communities to which they belong. Of these three justifications, although the IP-based and value-based justifications may seem more obvious, the harm-based justification may be more compelling due to the issue of cultural appropriation, propertization of traditional culture, and commercial adaptation. Graber’s (2009) suggestion to legally recognize TCEs either under IP or as a sui generis regime resonates well with both the collective right of self-determination and the collective right of self-government as endorsed by the Declaration on the Rights of Indigenous Peoples (2007).      

Although TCEs were initially included within the broader ambit of Traditional Knowledge, the need to grant TCEs protection as a separate form of IP gradually gained traction. The 12th Session of the WIPO Intergovernmental Committee on IP and Genetic Resources, Traditional Knowledge and Folklore (2008) considered IP protection for TK. WIPO defined the term TK to include the following: agricultural knowledge, scientific knowledge, technical knowledge, ecological knowledge, medicinal knowledge, “expressions of folklore” in the form of music, dance, song, handicrafts, designs, stories, and art work; elements of languages, such as names, geographical indications and symbols, and movable cultural properties. Any item which was not resulting from intellectual activity in the industrial, scientific, literary, or artistic fields, such as human remains, languages in general, and other similar elements of “heritage” in the broad sense, was considered excluded from the definition of TK. Hence, during this session, expressions of Folklore were considered part of TK itself. 

The WIPO Intergovernmental Committee on IP and Genetic Resources, Traditional Knowledge and Folklore, (2010) in its 17th session resolved to arrive at a definition for the term “Public Domain” specifically in reference to protection of TK and Traditional Cultural Expressions (TCE) or Expression of Folklore. The Committee agreed to exclude TK and TCE from the definition of “Public Domain” in order to protect them against unjust enrichment and misappropriation. The Committee proposed introducing the “Traditional Knowledge Commons” in order to restrict overlapping public domains or knowledge sharing spaces. The Traditional Knowledge Commons would be a mechanism to provide for regulated access to TK. “Public Domain” would include publicly accessible information or intellectual property which does not otherwise infringe on any legal right or obligation of confidentiality.  The differences between several phrases, including “publicly available and accessible,” “publicly available but not accessible,” “accessible but protected,” and “unprotected but not accessible” were discussed to distinguish publicly available TK from publicly unavailable TK. The latter, “unprotected but not accessible,” is the one which is not available without any monetary consideration or unjust enrichment. The UNEP Convention on Biological Diversity (2009) emphasized the need for seeking an identifiable Prior Informed-Consent (PIC) from indigenous communities, holding the TK  as a prerequisite when accessing traditional knowledge in order to fulfill the objectives under the legal frameworks of benefit-sharing.

The 37th Session of the Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore (2018) resolved to protect the TCEs under IP. This was aimed at recognizing the rights of indigenous communities and preventing the unauthorized use or unwarranted misappropriation of such TCE by any third party seeking to exploit them. The Committee agreed to define TCEs to include both pre-existing materials from the past and contemporary expressions of traditional cultures together with their adaptation, imitations, revitalizations, revivals, and recreation. Further, it was decided by the Committee that if a cultural expression is considered a traditional creation, it must be identified with a living tradition and community, which still bears and practices it. It is to be associated with the idea of collective ownership as opposed to individual ownership. A traditional creation is meant to exhibit a shared sense of communal responsibility, identity, and custodianship.

The WIPO Diplomatic Conference on Intellectual Property and Genetic Resources, Traditional Knowledge and Genetic Resources associated with Traditional Knowledge (2024) recently mandated a compulsory disclosure in patent applications for inventions which are based on Genetic Resources (GR) and/or associated TK. Contracting parties signing the Treaty are obligated to disclose the country of origin or source or identity of the indigenous people or local community of the GR and/or TK. This recent requirement raises concerns over the absence of any legal instrument for preserving TCEs as cultural heritage belonging to indigenous communities hailing from WIPO member states. Several jurisdictions currently provide for protecting TCEs originating in their respective states under Copyrights, Trademarks and Geographical Indications. Further, the Beijing Treaty on Audiovisual Performances (2012) grants performers of folklore a right under Article 15.4 of the Berne Convention for the Protection of Literary and Artistic Works (1886) access to a mechanism for the international protection of unpublished and anonymous works, including TCEs. However, the lack of any dedicated legally enforceable mechanism leads to considerable exploitation of the rights of traditional communities. 

Protection of Traditional Cultural Expressions Under IP: A Critical Analysis  

WIPO’s Intergovernmental Committee debates have focused on the distinction between Protection or Preservation, on the one hand, and Safeguarding or Promotion, on the other. IP grants a positive exclusive right to use work one has created and a negative right which excludes any unauthorized engagement of such work, thereby averring any unjust enrichment and misappropriation. Johnsson and Tualima (2017) state that a protection-based mechanism for TCEs under IP may not be feasible as it is a community-based right.  While the rationality of protection under IP is derived from the reward theory which incentivizes the individual creator, the idea of preservation would safeguard the rights of cultural creations belonging to indigenous communities. 

A critical analysis of all forms of IP presents the following opportunities and impediments to protecting the rights of indigenous communities over TCEs under IP:

a) The Berne Convention (1886) deals with the protection of works and copyrights of their authors. According to the WIPO, copyright is an author’s right over his work. It is a legal term which is used to describe the rights that the creators have over their literary, musical, and artistic works. Works covered under copyrights include books, drama, music, paintings, sculptures, and films, among others. Therefore, it can be concluded that the law      of copyrights and TCEs both deal with forms of literary, dramatic, musical, and artistic works. However, the difference lies in the nature of the intangible rights conferred. While copyright is a private ownership right, TCEs are community rights, handed down across generations, either orally or by imitation — it reflects the cultural or social identity of the said community. Commodification of original expressions by a third party in the form of derivative, adapted, or inspired works is a cause of conflict between the two. A claim for private ownership defies the very objective of TCEs. Once the term of copyrights comes to an end, the said work falls into public domain. However, traditional expressions, though available in the public domain, remain inaccessible. The essence of preservation and safeguarding TCEs is to ensure that commercial benefits are equally derived and shared with the communities which are recognized to have been associated with the origin of the said TCE. Preservation would safeguard against unwarranted and unauthorized claims of unjust enrichment. Nonetheless, the concept of the Collective Management Societies under the copyrights may be  adopted for securing the rights of indigenous communities and their TCEs. A collective management society under the copyright system grants primitive rights to the right-holder to administer their copyrights, facilitating copyright clearance and negotiating license terms in consideration for economic rewards in the form of royalties for commercial exploitation by third parties. Every such community recognized as having a TCE may be provided the right to register their community as a collective community. Such registered collective communities may exercise the right to use and grant third party licenses. This would ensure access-and-benefit sharing of profits accrued from commercialization equally between the traditional community and the third party. 

b) Trademark law deals with brand identification and distinctiveness among consumers with respect to goods and services. The purpose of trademarks is strictly commercial. Hence, trademark law may not be a feasible regime for protecting TCEs as cultural expressions are neither goods nor services. In fact, TCEs cannot be bound with commodification. They instead are nurtured as an experience by the community to which it belongs and is meant to be enjoyed equally by others. There is not meant to be any competition between the communities when allowing legitimate access of their TCEs to the general public. Consumerism is absent from the ethos of access and benefit sharing in a community. TCEs cannot be subjected to consumerism, rather they are to be preserved as an equitable opportunity of experience.

c) Geographical Indications (GIs) and TCEs are both community rights. While the latter deals with cultural expressions in the form of folklore, music and dance, performances or stories, meant to be experienced and enjoyed, the former deals with safeguarding rights of local communities engaged in manufacturing or producing goods attributable to specific geographical locations. An aspect of GIs, the registration of communities as a registered association or community capable of being recognized by way of a collective registration mark, may be implemented to preserve the rights of TCE communities. Every such TCE community may be registered under a collective association with a collective mark, equally distinctive and distinguishable to be identifiable with the community practicing it as cultural expression. 

d) The Traditional Knowledge Digital Library Project (2011), an initiative in India, makes all existing TK in India available in a digital format. Establishing a similar digital library for all the TCE belonging to and coming from specific indigenous communities may also be a step towards its preservation. Such a digital library would safeguard the community’s rights against misappropriation and unjust enrichment, preserve the objective of benefit-sharing, and bring recognition to indigenous communities credited for its origin.

Conclusion:

The idea of preserving the identity of indigenous communities practicing their agelong cultural expressions is to protect them against any unwarranted commercial exploitation. This may be legally enforced by recognizing TCEs as a sui generis regime. TCEs could be categorized as a separate form of IP. It may be identified as a community right where the right to administer the TCEs and its commercial exploitation vests with the collective management societies representing the interests of the indigenous community. In addition to this, creating a TCE Digital Library would further safeguard the rights of these communities against cultural appropriation, propertization of traditional culture, and unwarranted commercial adaptation. Extending the connotations of a community identity would be a step forward in preserving their right to self-determination and self-governance. 

*Gunjan Arora is an Assistant Professor at Institute of Law, Nirma University.

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Fighting Money Laundering in the Art Market – A Comparative Overview of U.S. and Swiss Law

Mar 12, 2025 | HALO x ILJ Collaboration, Online Scholarship

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

*Enzo BASTIAN

I.   Introduction

The connection between money laundering and the art market was first identified as early as the 20th century (De Sanctis; Roth). However, it is recent international scandals, such as those revealed by the Panama Papers, that have intensified regulatory scrutiny of the art market (Roth; Cassani/Heninger; Kern). In the European Union (EU), this oversight began in 2018 with the implementation of the Fifth Anti-Money Laundering Directive (AMLD V), which brought art market participants under the scope of anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. This framework was further reaffirmed in 2024 with the adoption of the EU’s first Anti-Money Laundering Regulation (AMLR).

Similarly, in February 2023, the Financial Action Task Force (FATF) — a leading international organization in the fight against money laundering — published a report specifically addressing the risks of money laundering in the art market (FATF, Report). The FATF emphasized the vulnerability of the art market to illicit activities and urged member states to implement robust countermeasures.

In the United States, the issue of money laundering within the art market resurfaced in particular in 2020 with a report from a Senate subcommittee (U.S. Senate, Report). This was followed by a comprehensive study published by the U.S. Department of the Treasury in February 2022 (U.S. DOT, Report). Despite these efforts, the American art market remains largely underregulated in terms of addressing money laundering risks. This regulatory gap is particularly concerning given the dominant position of the U.S. in the global art market, accounting for 42% of its total value in 2023 (UBS/Art Basel, Report 2024).

The lack of comprehensive regulation on this issue is not unique to the United States. Switzerland, which represented 3% of the global art market’s total value in 2023 (UBS/Art Basel, Report 2024), also faces significant regulatory deficiencies concerning money laundering in the art sector.

This note aims to briefly compare the legal frameworks of these two jurisdictions with respect to combating money laundering in the art market. It begins by presenting the rules governing preventive measures (II.) and repressive mechanisms (III.) before concluding with some final observations (IV.). It should be noted, however, that this note does not delve into the specific methods by which money laundering may occur in the art market, nor does it analyze the particular vulnerabilities of the sector (on these topics, see, e.g., U.S. DOT, Report; Hufnagel/King; Dagirmanjian; Turner; Cassani/Henninger).

II.   Money Laundering Prevention

In addressing the fight against money laundering, it is essential to focus on the so-called preventive rules — those designed to preclude money laundering activities, irrespective of whether a specific instance of money laundering has occurred. These rules require regulated entities to implement internal procedures aimed at preventing money laundering offenses. Two primary categories of measures must be adopted:

• Due Diligence Measures: These measures primarily involve gathering specific information as part of establishing and maintaining business relationships. This includes identifying the client, verifying the ultimate beneficial owner, and determining the origin of funds.
• Reporting Obligations: When suspicious activities, including potential money laundering, are detected during the due diligence process, regulated entities are obligated to file a Suspicious Activity Report (SAR). Such reports must be submitted promptly to the respective national financial intelligence unit. In the United States, this unit is the Financial Crimes Enforcement Network (FinCEN), while in Switzerland, it is the Money Laundering Reporting Office Switzerland (MROS). These units analyze the reported information and decide whether the matter warrants escalation to law enforcement authorities for further investigation and potential prosecution.

Without delving into the specific content of these preventive rules, it is critical to identify the entities subject to these obligations to assess the extent of regulatory oversight in the art market in the United States (A) and Switzerland (B).

        A.   U.S. Law

On May 18, 2018, U.S. Congress Representative Luke Messer introduced a bill aimed at including art dealers in the fight against money laundering under the Bank Secrecy Act (BSA) (Turner). Although the bill ultimately failed to pass, Congress later amended the BSA to include the antiquities market within the scope of AML regulations (Turner). On January 1, 2021, the U.S. Congress enacted the Anti-Money Laundering Act of 2020 as part of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (NDAA) (Pub. L. No. 116-283). This legislation introduced new provisions under Section 6110 of the AML Act, subjecting the antiquities trade to AML/CTF requirements (U.S. DOT, Report).

Following this, the Department of the Treasury was tasked with evaluating whether AML/CTF regulations should be extended to the broader art market. This evaluation culminated in the aforementioned Treasury report (U.S. DOT, Report).

In parallel, another legislative initiative — the ENABLERS Act — was proposed in 2021, seeking to fully subject the art market to AML/CTF regulations. Although the bill passed in the House of Representatives, it failed to secure approval in the Senate (Turner).

For now, AML/CTF regulations in the United States remain applicable primarily to financial intermediaries, such as banks, and do not seem to impose obligations on art market participants (U.S. DOT, Report; Dagirmanjian; Turner). With the finalization of the implementing regulations pending (Center for Art Law, USA AML Regulation), this regulatory gap persists.

Nevertheless, art market actors may still encounter AML/CTF obligations. Specifically, any person engaged in a trade or business in the United States is required to file a report if they receive more than USD 10,000 in cash, coins, or certain monetary instruments, whether in a single transaction or in two or more related transactions (U.S. DOT, Report).

Despite this, such measures are barely sufficient. The art market and its participants remain largely unregulated with respect to money laundering and terrorist financing risks.

        B.   Swiss Law

Under The Swiss law, the regulatory framework is broadly similar to that of the United States. Preventive AML measures under the Anti-Money Laundering Act (AMLA) primarily apply to financial intermediaries, such as banks (Art. 2 AMLA). Art dealers are generally not classified as financial intermediaries and are therefore not directly subject to these preventive regulations (Cassani/Henninger; Kern).

In certain circumstances, art dealers may be considered financial intermediaries if they provide financial services — such as loans — under Art. 2 para. 3 AMLA. However, this classification applies only if the financial service is not connected to the execution of another principal contract (e.g., the sale of artworks). Otherwise, the activity falls outside the scope of the AMLA, as specified in Art. 3 let. f of the Anti-Money Laundering Ordinance (Cassani/Henninger). Consequently, Art Secured Lending activities do not necessarily fall within the scope of AML regulations in Switzerland, as they are generally tied to a principal contract (e.g., the sale of artworks) when carried out by an art dealer or an auction house (on this topic, see Tistounet).

Nonetheless, art dealers in Switzerland may fall within the scope of AMLA in specific circumstances — namely, when they accept cash payments exceeding CHF 100,000 as part of a transaction (Art. 8a para 1 AMLA). This threshold, however, is relatively high compared to similar regulations in other jurisdictions, including the United States.

As a consequence, the Swiss art market, like its U.S. counterpart, remains largely exempt from comprehensive regulations aimed at preventing money laundering or terrorist financing.

III.   Money Laundering Repression

In addition to preventive rules, most jurisdictions have also enacted measures to criminalize money laundering. These repressive regulations are designed to sanction individuals who actively engage in money laundering activities. Unlike preventive measures, these provisions are sector-agnostic and can, therefore, be applied to actors in the art market as well (Dagirmanjian; Cassani/Henninger).

To understand the scope and application of these measures, it is essential to briefly examine the legal frameworks in the United States (A.) and Switzerland (B.).

        A.   U.S. Law

In the United States, the Money Laundering Control Act (MLCA), codified under Sections 1956 and subsequent provisions of 18 U.S.C., criminalizes money laundering by categorizing such acts into four distinct types: promotional, concealment, structuring, and tax evasion (Dagirmanjian).

Some of these offenses may have direct implications for the art market and could expose actors within the sector to criminal liability (Dagirmanjian). Of particular relevance is Sec. 18 U.S.C. § 1957, which penalizes individuals who “knowingly engage in a monetary transaction involving more than USD 10,000 in criminally derived property.” This provision is especially significant in cases where illicitly obtained funds are used to purchase artworks (e.g., cash obtained from drug trafficking), thereby connecting money laundering to the art market.

        B.   Swiss Law

In Switzerland, unlike in the United States, money laundering is criminalized through a single offense. This is enshrined in Art. 305bis of the Swiss Criminal Code (SCC), which penalizes acts intended to conceal the illicit origin of assets. These acts may include traditional money laundering activities, such as using proceeds from drug trafficking to purchase artworks (Cassani/Henninger; Kern). The provision also extends to cases of “laundering of provenance,” where the objective is to give a lawful appearance to cultural goods looted abroad (on this topic, see Bastian).

Additionally, Swiss law establishes a related offense that only applies to financial intermediaries subject to due diligence obligations under the AMLA (e.g., banks). Under Art. 305ter, para 1 SCC, financial intermediaries may face criminal prosecution if they fail to properly identify the beneficial owner or knowingly provide false information about the beneficial owner in the context of a business relationship.

IV.   Conclusion

The American and Swiss systems currently exhibit significant similarities, as the art markets in both countries remain largely unregulated with respect to AML/CTF measures. Actors in the art market are not subject to preventive AML rules, despite international standards such as those outlined in the EU (Art. 3(3)(i) & (j) AMLR) or the recommendations of the FATF. Given the art market’s inherent vulnerability to money laundering, it may be time for both nations to adapt their regulatory frameworks.

In the United States, the FinCEN is progressing slowly but continues to evaluate the expansion of AML regulations to encompass the art market (Center for Art Law, USA AML Regulation). While some scholars advocate for such reforms (Dagirmanjian; Turner), others remain critical (Burroughs).

Similarly, in Switzerland, a parliamentary motion submitted in 2022 proposes extending the AMLA to include art dealers (Motion Pult CN 22.3104). Since October 2024, the motion is under review by a commission of the Council of States. This indicates that Swiss law could undergo reform in the coming years. Legal scholars have also addressed this issue, with a majority, including the author of this note, supporting the inclusion of art dealers under the AMLA (Roth; Cassani/Henninger; Kern). However, this view is also not without opposition (Ryser).

For the time being, self-regulation appears to be the only practical solution. Several recommendations have been issued by organizations such as the Basel Institute on Governance (Basel Art Trade AML Principles) and the Responsible Art Market (RAM) initiative (RAM AML Guidelines). However, the non-binding nature of these recommendations limits their effectiveness. They fail to create a level playing field among actors within the same sector or to ensure uniform rules. This lack of uniformity is unfortunate, as standardized regulations would significantly enhance international cooperation, a critical factor in combating money laundering.

Furthermore, none of these recommendations or ongoing parliamentary efforts seem to address the issue of Non-Fungible Tokens (NFTs). Despite their significant presence in the art market, NFTs present considerable vulnerabilities to money laundering (FATF, Report; Hufnagel/King; Bastian). The omission of this digital asset class underscores a critical gap in current regulatory initiatives. Within the EU, despite the adoption of the new AMLR, NFTs are likely not covered by these rules since they are not considered as crypto assets under the new MICA Regulation (art. 2 (1)(7) AMLR; consid. 10 MICAR; art. 2(3) MICAR). This situation is, however, likely to evolve as the European Commission is tasked with presenting, by December 30, 2024, a specific proposal to provide a legal framework addressing the issue of NFTs (ESMA).

* Enzo BASTIAN is a doctoral candidate at the University of Lausanne (Switzerland). He is writing his doctoral dissertation on the topic of money laundering in the Swiss art market under the supervision of Professors Carlo Lombardini and Marc-André Renold. Holding a Master’s degree in law and a Certificate of Advanced Studies (CAS) in International Business Disputes from the same university, Enzo BASTIAN is the author of several contributions and insights in banking and financial law. In parallel, he is also a graduate assistant at the CEDIDAC of the University of Lausanne.

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