As Money Launderers Buy Dalís, U.S. Looks at Lifting the Veil on Art Sales
nytimes.com
nytimes.com
It began in 1989, with leaders of the G7 agreeing at a summit to create the FATF. It has, by at least one account, become one of the least effective policy experiments in history:
https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1....
There is a reason that historically, the state needed a warrant, issued by a court, before it could conduct a search. Allowing the state to conduct dragnet surveillance creates the kind of power imbalance that ensures growing income equality and social instability.
The need for the state to obtain a warrant before conducting a search was seen as striking the right balance between the need to maintain reasonable checks on the power of the state, and the need to investigate crime. And in one summit, all of that was cast aside.
Any actual incident of money laundering involves some underlying crime that generated the illicit revenue. To prove money laundering occurred, you need to prove that the underlying crime occurred.
So an AML law is redundant. Any actual money laundering that is proven would land the party involved in prison, for the underlying crime.
But the so-called AML laws do not require proving money laundering occurred. It only requires proving that a person did not comply with the AML-related disclosure requirements, i.e. not complying with warrantless mass-surveillance. The crime is privacy.
The question is how much benefit an average society member gains for that cost. How many planes were not hijacked because the potential perpetrators knew they won't be able to covertly bring a handgun abroad? How many crimes were not done because the potential perpetrators understood that they won't be able to turn the proceeds into large sums of usable money?
It's really hard to measure, and because of that, the extent of such regulations tends to grow, just in case. There's plenty of security theater in airports, along with useful measures. There's plenty of overreach in AML regulations, along with useful measures. Curbing both back to the reasonable levels is a hard task, because it's hard to obtain a strong evidence that a particular level is reasonable at preventing the crime.
So AML laws result in massive amounts of privacy violation (far more than what TSA rules, which only apply when one boards a plane, impose), in requiring the reporting of a significant fraction of private financial interactions to law enforcement surveillance agencies. And despite this massive sacrifice in government accountability and privacy, these laws are widely circumvented, to the tune of billions of dollars worth of criminal proceeds being laundered each year.
The reason why AML laws are dangerous is that the state itself is a threat vector, and these laws massively increase the power of the state relative to the private citizen. Policy needs to be crafted to minimize all risks, not just those that emanate from malicious non-state actors, like criminals. The risk of tyranny, or structural repression, needs to be addressed too.
Given there are numerous other investigative tools available to law enforcement to stop crime besides warrantless surveillance, I see no justification for such a dangerous law, with such limited evidence of effectiveness, being in place.
Just a guess, you control the value of the asset.
If 1 Bitcoin is $30,000 and I sell it to you for $300,000 that may raise many questions.
If you buy the NFT for my art for $30,000 and then it sells in an auction for $300,000 , it is easier to justify that it just has appreciated with time. The world of art is full of this appreciations, many times for money laundering and tax evasion reasons, thou.
It's good to ensure his art doesn't end up in the hands of criminals but at the same time, does this depress the value of art overall?
Has anybody seen the movie: “The Gods Must Be Crazy”?
Art in the millions is definitely an exclusive market though, and I'm sure draws various unsavory people.
Buying gold is also easier than buying paintings, and buying gold ETFs is even easier. As is buying stock, bonds, etc. It's easier to hedge societal collapse by buying high value necessities (though who can truly predict how a collapse will unfold).
I think there's a certain kind of person who can be a great art investor by having a good idea of what art is going to retain interest (and thus value), but I would not call it easy compared to index funds or most other popular stores of value.