The dealer and international sanctions: selling art when geopolitics intervenes

01The legal framework imposed on galleries

International sanctions constitute a set of restrictive measures adopted by states or international organisations to exert economic and diplomatic pressure on countries, entities or individuals. For dealers, the most relevant measures are asset freezes, prohibitions on transactions with designated persons or entities, and sectoral restrictions that may affect the trade in luxury goods, a category in which artworks are sometimes included.

The European Union explicitly included works of art in its sanctions packages adopted since 2022 against Russia. The European regulation prohibits the sale, supply, transfer or export of luxury goods above a certain value threshold to Russia or to designated Russian persons. Works of art, collectors' items and antiques appear on the list of goods concerned. A European dealer who sold a work to a collector appearing on sanctions lists, or who facilitated a transaction circumventing these restrictions, would commit a criminal offence carrying severe penalties.

In the United States, the Treasury Department's Office of Foreign Assets Control administers sanctions programmes affecting numerous countries and individuals. The American art market has been highlighted by several Senate reports that underlined the sector's vulnerabilities to money laundering and sanctions evasion. The Corporate Transparency Act and discussions around extending anti-money-laundering obligations to art dealers reflect a regulatory trend that will only intensify.

02The dealer's concrete obligations

The dealer's first obligation is to know their clients. This requirement, designated by the acronym KYC for Know Your Customer, involves verifying the buyer's identity, ensuring they do not appear on current sanctions lists, and understanding the origin of funds used for the transaction. For a gallery accustomed to dealing with trusted collectors known for years, this procedure may seem superfluous. It is not. Sanctions lists are updated regularly, and a collector who was subject to no restrictions yesterday may find themselves designated tomorrow because of ties to a sanctioned regime.

The second obligation is to screen transactions. The dealer must verify that the artwork's final destination does not contravene current restrictions. A work sold to a collector based in Switzerland but intended for shipment to an embargoed country poses a compliance problem the dealer cannot ignore. Similarly, a transaction involving an opaque intermediary, a shell company in an offshore jurisdiction or a payment from a high-risk country must trigger thorough examination.

The third obligation is documentary. The dealer must retain records of verifications, document client identities, archive exchanges relating to the origin of funds and artwork destinations. In the event of an inspection by competent authorities, this documentation will constitute proof of the dealer's diligence and their best protection against potential prosecution.

03Concrete situations galleries face

A gallery participating in an international fair regularly encounters buyers it does not know and whose compliance it must rapidly assess. A collector who appears at a stand at Art Basel, wishes to acquire a work of significant value and proposes payment by wire transfer from a foreign bank poses a compliance question that must be resolved before finalising the sale. Major galleries such as David Zwirner, Hauser and Wirth and Gagosian have established internal compliance departments to handle these verifications. Medium-sized and emerging galleries, which lack these resources, must nonetheless perform these checks with available means.

The question of intermediaries is particularly sensitive. The art market traditionally uses advisors, brokers and agents who purchase on behalf of third parties. This practice, perfectly legitimate in principle, can serve as a screen for prohibited transactions. A dealer selling a work to an advisor acting for an anonymous collector must demand to know the beneficial owner's identity. Refusal to provide this information constitutes a warning signal that should lead the dealer to decline the sale.

The transport and shipping of artworks raise specific questions. Freeports, those duty-free storage zones located in Geneva, Luxembourg, Singapore and the United Arab Emirates, have been identified as vulnerability points in the surveillance of art flows. A work stored in a freeport can change ownership without physically changing location, making it difficult to track the ownership chain. A dealer shipping a work to a freeport must document the transaction with particular care.

04The case of Russian collectors and the 2022 precedent

The sanctions adopted by the European Union and the United States following Russia's invasion of Ukraine in February 2022 constituted a turning point for the art market. Several Russian collectors who ranked among the most active on the international market found themselves on sanctions lists, which immediately froze their transactions and created complex situations for galleries in the process of negotiating with them.

European galleries had to cancel ongoing sales, return deposits and interrupt commercial relationships sometimes spanning several decades. Some works in transit were immobilised in warehouses while their legal status was clarified. Institutional loans involving designated collectors were suspended, creating complications for exhibitions under preparation. The Stedelijk Museum in Amsterdam and other European institutions had to navigate these new constraints.

This situation highlighted the dependence of certain art market segments on a small number of collectors with very high purchasing power whose nationality or political connections made them vulnerable to sanctions. The lesson for dealers is clear: diversifying the collector base is not merely good commercial practice but a protective measure against geopolitical risk.

05Beyond Russia: a global landscape of restrictions

While sanctions against Russia have dominated the headlines, they represent only part of the regulatory landscape dealers must navigate. Restrictions affecting Iran, North Korea, Syria, Myanmar and other countries or territories under sanctions create a web of constraints that international dealers must master. American sanctions, given their extraterritorial reach, can affect transactions that do not even pass through American territory but involve dollar-denominated payments or parties with a connection to the United States.

A dealer exhibiting at fairs in the Middle East, Asia or Latin America must familiarise themselves with applicable sanctions regimes in those regions and with specific risks linked to certain jurisdictions. The Financial Action Task Force, the intergovernmental body that sets international standards for anti-money-laundering, maintains a list of jurisdictions with strategic deficiencies that dealers should consult regularly.

06Establishing a proportionate compliance policy

A dealer is not a banker and a gallery is not a financial institution. Compliance obligations must be proportionate to the scale of activity and the nature of risks faced. A gallery whose turnover relies mainly on local sales to long-identified collectors does not have the same needs as an international gallery participating in fairs across four continents and dealing with buyers encountered for the first time.

Establishing a compliance policy begins with a risk assessment. The dealer identifies situations of greatest exposure: sales to unidentified buyers, transactions involving sensitive jurisdictions, payments from opaque structures. Based on this assessment, appropriate procedures are defined: systematic identity verification above a certain amount, sanctions list consultation before each significant sale, transaction documentation.

Accessible digital tools enable galleries of all sizes to consult consolidated sanctions lists. Databases maintained by the European Union, the American OFAC and the British Treasury are freely searchable online. Specialist providers offer automated screening services adapted to modestly sized businesses. The cost of these tools is negligible compared with the consequences of a sanctions violation, which can include considerable fines, criminal prosecution and irreparable damage to the gallery's reputation.

07Compliance as a commercial argument

Far from being a purely administrative constraint, compliance with international sanctions can become a commercial argument for dealers. Institutional collectors, foundations, family offices and art advisors acting on behalf of major fortunes are themselves subject to strict compliance obligations. They favour galleries that demonstrate a professional approach to these matters and avoid those whose practices cast doubt on the rigour of verifications performed.

Artedusa supports its partner galleries in this professionalisation effort by offering a transparent transaction framework that facilitates party identification and exchange traceability. The platform provides a secure environment where collectors and galleries can interact within a framework compliant with current regulatory requirements, representing a competitive advantage in a market where trust is the primary currency.