Well, it would not be right to say all art dealers are criminals, but the art sector is prone to money laundering because of the enormous transition sizes, subjective prices, and preference for cash payments. Art dealers need privacy for security reasons, but the government needs to be proactive in tackling the severe issue of money laundering using art. Dubai is a famous city and one of the seven emirates and is a renowned business hub open to individuals and businesses from across the globe.

The art market is prone to misuse by criminals. The UAE market has implemented the AML law made by FATF- Financial Action Taskforce to strengthen the UAE government to combat the challenges of financial terrorism and prevent money laundering. The anti-money laundering laws in the UAE help businesses to identify suspicious customers and detect financial fraud early in the customer screening process.

Financial institutions can prevent money laundering by following the best risk practices in their business relationships and deter fraudsters from using art to hide money laundering. They can keep a vigilant eye on individual buyers, art dealers, galleries, and auction houses. It helps prevent any form of financial misuse and protects innocent people from being used unknowingly for money laundering. With the risk-based approach, authorities can detect suspicious financial transactions. It will focus on three risk-prone categories- verifying the client, the source of the procurement of the art piece, and the source of the buyer’s financial resources involved in the transaction. Some rules that need to be followed are-

The KYC process should be stringent to detect any suspicious activity in the early stages of customer screening. The process should provide complete information about the customers’ purchasing and selling high-value art. It should also consider the individuals’ duration as a customer and the business time.

Screening should be done on risk scoring method considering different factors such as -if the sale details are in the public domain and the type of artwork the business deals in.

Identification of Politically exposed persons (PEP) through an AML Screening Process.

Businesses can identify the UBO- Ultimate Beneficial Owner using transaction monitoring software.


Financial institutions can determine suspicious nature and inform them about the risk of business relationships with such individuals and entities.

Institutions need to focus Special attention on the Source Of Wealth (SOW) and Source Of Funds (SOF).

Institutions should also concentrate on dealers, galleries, and auction houses to ensure that they are screened per the KYC program. The program will help bring more transparency to the transaction and mitigate risks. The transactions, therefore, are more transparent, and there’s less probability of any suspicious transaction.

Verifying SOW and SOF: SOW includes activities that include the total net worth, while the SOF involves the money used for facilitating transactions between the FI and the client. Money laundering has become a massive issue in the UAE, and the government is taking strict actions to prevent the problem from spiralling. It is essential to record the SOF details when the customers open an account. If the SOF includes sales of an artwork, then receipts for relevant pieces of art should be gathered.

The AML team will analyse if the artwork’s price is reasonable and not exaggerated or inflated to facilitate money laundering. They also need to verify the invoice provided – if it’s real or not and detect any suspicious activity. They can take the help of the Art Loss Registry, and the art databases can shed light on the same.