THE USE OF ARTWORKS IN MONEY LAUNDERING SCHEMES AND THE ROLE OF FREEPORTS

Abstract

The art market has increasingly been recognised as a sector vulnerable to money laundering and tax fraud due to its structural opacity, subjective valuation mechanisms, and historically limited regulatory oversight. In recent decades, these risks have been further intensified by the growing role of freeports, which have evolved from trade-facilitating customs zones into long-term storage facilities for high-value assets, particularly artworks. This paper examines the use of artworks as instruments of money laundering and analyses the role of freeports in enabling the concealment, transfer, and integration of illicit financial flows. Drawing on academic literature, legal scholarship, and institutional policy documents, the paper situates the analysis within broader theoretical frameworks of organised and financial crime. It identifies key mechanisms through which artworks are used in money laundering schemes, including valuation manipulation, private transactions, offshore ownership structures, and the use of artworks as financial assets. The paper further explores the historical development and legal nature of freeports, highlighting their transformation into spaces of regulatory opacity that may facilitate tax avoidance and money laundering. The analysis demonstrates that the misuse of artworks and freeports is not an isolated phenomenon but a systemic consequence of financialisation, regulatory fragmentation, and transnational capital mobility. While recent regulatory initiatives, particularly at the European level, have sought to address these risks, significant gaps remain with regard to transparency, beneficial ownership, and effective oversight. The paper concludes that combating money laundering and tax fraud in the art market and freeport environment requires a comprehensive and coordinated approach that extends beyond traditional financial regulation and integrates tax authorities, customs administrations, and law enforcement bodies.