A Guide to the Latest AML Regulations for Auction Houses

Stories of artworks bought for tenner and sold in millions are not so rare. The subjectivity of art price is its most exclusive trait. A few years back, you couldn’t question how and why someone sold or bought art for such low or a high price. This subjective pricing and the ease with which it can be transported from one location to another make it a highly vulnerable asset. For criminals, it means opportunities to launder illicit funds and a way of moving value across borders.

Annual art sales fell to an estimated $57.5 billion in 2024 after reaching $68.1 billion in 2022.

High-value artworks are easy to transport, can be priced subjectively, and succeed in a sector recognized for discretion. Recognizing these risks, auction house professionals are now at the front lines of a widening regulatory battle.

Awareness About the Risks in the Art Market

A vibrant yet risky art market is a booming business opportunity, but it’s unevenly regulated. While the U.S. accounts for approximately 42% of arts sales, Europe and Asia aren’t far behind, making the industry a truly global one. With such scale comes opportunity for abuse.

The U.S. Treasury has identified key money laundering  risk factors in high-value art transactions, including their

• Valuable and transferable nature.
• The lack of transparency due to intermediary involvement.
• The use of shell companies and art advisors.

Auctions often involve buyers and sellers who prefer anonymity, and when strong ownership checks are missing, this creates loopholes in the system that allow criminals to hide their identities.

Challenges Auction Houses Face in AML Compliance

1. Anonymity and Beneficial Ownership

Auction houses usually do not know their actual clients because transactions are mostly carried out with the assistance of third parties or shell companies. Added transparency is needed to ensure that whoever is buying or selling is ultimately unmasked. Proper due diligence by auction houses is essential to prevent criminals from laundering large sums by purchasing art through proxies and then reselling it to legitimize funds.

2. Cross-Border Complexities

The major artworks are commonly smuggled between countries, and further valuations also differ from country to country, this is how culprits use these inconsistencies to evade authorities. The Harvard Art Law Organization notes that the arbitrary art pricing, combined with the prevailing culture of secrecy in the industry, offers maximum opportunity for manipulation.

3. Regulatory Patchwork

In Europe, the 5AMLD and in the UK, the Money Laundering Regulations (MLR), both require Customer Due Diligence (CDD) , ongoing monitoring, and recordkeeping for transactions exceeding  €10,000. In contrast, U.S. auction houses remain outside mandatory AML supervision, although the Art Market Integrity Act, introduced in July 2025, proposes bringing them under the Bank Secrecy Act and imposing similar AML requirements. These differences in regulations result in loopholes on a global scale that launderers can use to target jurisdictions with weaker oversight.

4. Regulatory Fines

Failure to examine a high-risk customer or missing a suspicious transaction can be the reason for serious legal actions, such as incarceration and hefty penalties. Therefore, auction houses should adapt to changing regulatory standards and measure their exposure to legal actions due to illicit demands for client confidentiality.

Difference in Regulatory Approaches for Auction Houses

FATF Guidance

The Financial Action Task Force (FATF) classifies auction houses as Designated Non-Financial Businesses and Professions (DNFBPs) under Recommendation 22. This categorization calls for customer due diligence (CDD), financial flow analysis, and suspicious activity reporting, setting the need for national laws.

While FATF does not set transaction thresholds, it recommends that art market participants assess emerging dangers and integrate suitable countermeasures.

European Union and the United Kingdom

In both the European Union and the United Kingdom, essential changes in laws have been made to extend AML obligations to the art sectors. These required measures include:

• Performing CDD and verifying beneficial ownership.
• Keep track of the client’s financial data.
• Informing about the suspicious client activities to regulators.
• Enhanced due diligence for high-risk clients and PEPs

France has even conducted a sectoral level risk assessment for the art and auction houses industry. The 2023 Analysis Sectorielle des Risques (ASR) identifies multiple laundering and financing threats from tax fraud and corruption to trafficking and sanctions evasion.

It determines vulnerability of high-value goods based on its origins and ease of transportability. The ASR forms the basis of a risk-based supervisory framework in the art market, which guides the enhanced due diligence for high-risk transactions.

2017 Money Laundering Regulations in the UK updated these rules in a similar context, requiring auction houses to appoint a Money Laundering Reporting Officer (MLRO), maintain in-house checks, and prioritize staff training.

United States

The United States (U.S.) is a notable exception. While antiquities dealers have been included in the expanded AML obligations under the Anti-Money Laundering Act of 2020, art dealers were left out.

The Art Market Integrity Act (AMIA), introduced in July 2025, seeks to close this gap that exists between regulation of antiquities and art dealers in the United States. If passed, it would extend AML regulations for auction houses, art dealers, and related entities, demanding that they:

• Build AML programs with internal controls and learning.
• Carry out customer due diligence (CDD) and identify beneficial owners.
• File suspicious activity reports and currency transaction reports.
• Appoint a compliance officer and undergo independent testing.

Pending legislation creates uncertainty; however, prudent auction houses should prepare for the adoption of AMIA-like obligations.

AML Obligations for Auction Houses

An effective AML program doesn’t mean only gathering customer IDs, it means complete due diligence verification if the customer really is who they say they are. Auction houses must know about:

• Risk-Based Approach: Evaluate all customers’ risk profiles to detect whether they are not a sanctioned entity. High-risk factors may include high-value transactions, PEP involvement, or links to high-risk jurisdictions. For Enhanced Due Diligence, there must be enhanced scrutiny and continuous surveillance.
• Recordkeeping: Keep detailed records of transactions, provenance documents, and red-flagged activities.  When the client data is recorded properly, it assists regulators in conducting investigations in real-time and demonstrates regulatory compliance.
• Reporting Obligations: Suspicious transactions must be reported without tipping off the client. Reports should include detailed reasons for suspicion and evidence gathered.
• Internal Controls: Designate a compliance officer and keep regular checks on whether the teams are adhering to AML regulatory requirements.
• Ongoing Surveillance: Client risk can change at a later stage after the onboarding process as new transactions are processed or new developments occur in client’s life cycle, therefore continuous monitoring of the business relationship is necessary.

How Auction Houses Can Use Technology for AML Compliance

Modern technology reduces compliance burdens and offers precision. Here’s how:

Automated CDD and Screening

AI-powered systems verify identities, cross-check beneficial owners against global sanctions and PEP lists, and conduct adverse media screening. Through automated solutions, operational mistakes can be easily reduced, and it simplifies the onboarding processes.

Real-Time Inspection and Warnings

Machine-learning algorithms detect anomalous behaviours in real-time. Instant alerts allow compliance officers to act preemptively, instead of depending on quarterly audits.

Risk Scoring

Algorithms assess multiple factors, including transaction size, client history, and jurisdictional risk, in order to give a score based on the client’s risk profile. This risk-based approach helps release resources from low-risk customers to high risk situations and speed up enhanced due diligence.

Adverse Media Monitoring

Automated tools track news sources for negative reports about clients or artworks, flagging reputational risks early. With data pulled from multiple jurisdictions in different languages, these systems fill a critical gap in manual research.

Streamlined Recordkeeping

Digital platforms contain a centralized system from which the auditors can quickly get all the client’s ownership records,  transactional history, and risk profile. This minimizes the workload and completes the due diligence process in real-time.

It’s quite challenging for the auditors to pull out information from different sources, but with technology incorporated in AML programs, auction houses stand to benefit from current regulations without too much preparation for future changes.

How Art Houses Have Been Named in Major Money Laundering Scandals?

1MDB Case

A misappropriation of billions of dollars from public funds was at the center of an international scandal involving the Malaysian sovereign wealth fund popularly called 1MDB.

According to art-market reporting, financier Jho Low used diverted funds to purchase high-value works of art, such as Monet’s Saint-Georges Majeur for $35 million and Nymphéas for $57.5 million. The U.S. authorities later seized paintings and artwork of Monet, Van Gogh, Picasso and other artists.

1MDB demonstrates how criminals exploit the art’s subjective value. However, an effective due diligence would have prevented these suspicious financial flows by detecting their actual sources.

Ojiri-Ahmad Affair

The Ojiri-Ahmad Affair provides another illustration of these risks. In a recent case on 6 June 2025, at the

Central Criminal Court, a judge sentenced London art dealer Oghenochuko Ojiri to 2 years and 3 months imprisonment after it was found that he had sold art to a Hezbollah financier, Nazem Said Ahmad, who was under U.S.-imposed sanctions.

Investigators discovered that Ahmad’s network had purchased over $54 million in art through auction houses since 2012 by using aliases and front companies. The prosecution underscored that even small dealers should align with anti-money laundering standards and that ignorance of sanctions lists is no defence.

The above-mentioned cases highlight that weak oversight can give rise to stringent financial and legal consequences. That’s why there is a critical need for AML regulations for auction houses to perform effective customer due diligence (CDD), sanctions screening, and ongoing monitoring.

How Auctions Houses Meet Due Diligence Obligations with AML Watcher

Does the anonymity of art buyers and the difficulties in international trade leave your auction house exposed? Or are you worried about unknowingly dealing with sanctioned individuals, politically exposed persons, or price‑manipulated artworks?

AML Watcher can help you turn vulnerability into vigilance:

• Continuous Monitoring & Adverse Media Alerts: Proactively address risks and operate securely in multiple jurisdictions with real-time alerts on updated sanctions, criminal records, and leaked data.
• Real-time Sanctions & PEP Checks: Identify hidden owners and high-risk clients before making a sale. Use up-to-date sanctions and PEP watchlists from over 235+ countries.
• Cross-Border Coverage & Effective Case Management: Enhance the CDD process, streamline reporting, and organize records with AML Watcher’s global coverage in over 235+ countries with unified data.
• AI-Powered Risk Scoring: Use artificial intelligence to identify the anomalous patterns in transactions. This facilitates the accurate identification of high-risk artworks and prospective buyers.

Are you worried that a sanctioned entity or high-risk PEP is buying and selling through your auction house?  See how AML Watcher’s platform can assist you in aligning with the legal obligations, automating workflows, and protecting your brand with a robust AML for auction houses.