Anti-money laundering and countering financing of terrorism obligations under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 are now a familiar feature of commercial life in New Zealand and will be expected by most people when dealing with banks, lawyers, accountants, real estate agents and other such “reporting entities”. 

Less familiar, perhaps, is the application of the AML regime to parts of the luxury goods market, including transactions involving art and cultural objects, where obligations arise when a person or business is acting as a “high-value dealer”.

In June 2026, the Department of Internal Affairs released guidance, prepared with the New Zealand Police Financial Intelligence Unit, on suspicious activity reporting for high-value dealers and persons trading in high-value goods. For art market participants, the guidance is important because it identifies money laundering and terrorism financing risks associated with art, taonga, antiquities and other cultural objects, and sets out red flags that may indicate suspicious activity, which build on and summarises earlier risk assessments and FAFTF Reports on this sector.

This article explains why the DIA considers there to be money laundering and terrorism financing risk in the art market, and when art market professionals such as dealers and auctioneers may be considered high-value dealers required to comply with the Act. It then turns to the more practical issue raised by the June 2026 guidance: how should dealers recognise suspicious activity when it appears in an art market transaction?

Why is the art market at risk?

While it is recognised that most art market participants buy or sell cultural objects for entirely legitimate business reasons or for their own enjoyment, and do not have a connection to illicit activity, criminals and terrorist groups also use cultural objects for money laundering and to generate illicit funds.

In that context the DIA considers that art, antiquities, taonga and other cultural objects can operate as stores of value. They can be bought with illicit funds, held privately, hidden, transported across borders, stored in specialist facilities, or later resold in a way that helps disguise the origin of the money. This can make such objects attractive for money laundering.

The risk is heightened because art and cultural objects are often unique. Their value can be difficult to verify objectively. Provenance may be incomplete, unclear or manipulated. Transactions may also involve intermediaries, offshore parties, private storage, confidentiality and subjective valuations. Those features can make it easier to obscure the true owner, value, source of funds, or commercial rationale for a transaction.

For cultural objects, there is an additional concern. Items may have been looted, illegally excavated or smuggled from regions affected by armed conflict, organised crime or terrorist activity. In those cases, the transaction may raise not only money laundering issues, but also terrorism financing and cultural property trafficking risks.

When is an art market participant a “high-value dealer”?

In the art market, AML/CFT obligations are not triggered by every transaction. They arise where a person or business, in the ordinary course of trade, buys or sells relevant high-value goods in cash, or by related cash transactions, of NZD $10,000 or more.

Alongside other objects that may not necessarily be transacted in the art world, relevant goods include jewellery, paintings, prints, sculptures, photographs, carvings, protected New Zealand objects, protected foreign objects, taonga and other artistic or cultural artefacts. 

Where the threshold is met, an in trade art market participant may be treated as a high-value dealer and may need to comply with AML/CFT requirements. Those requirements can include having a compliant risk assessment and compliance programme, carrying out customer due diligence and verification for relevant transactions, record keeping, prescribed transaction reporting, and not proceeding with a transaction where required checks cannot be completed.

In passing, it is worth noting that the Act specifically mentions auctioneers can be captured under the definition of high value dealer when they are involved in the sale of qualifying goods. But it also excludes others who may be engaged in providing services other than the buying or selling of qualifying goods. As such it may be that, for example, a museum or institutional gallery might not be captured if they acquire or sell an object, so long as they are not buying or selling to such an extent that they are considered to be in the trade of buying or selling. But it must be said there is some ambiguity in the wording of the exclusion, and care would need to be taken before anyone should assume they were exempt.

Suspicious activity reports

Recent legislative changes now state that high-value dealers can make suspicious activity reports. A suspicious activity report, or SAR, is a report to the Police Financial Intelligence Unit where there are reasonable grounds to suspect that a transaction or proposed transaction may be connected with criminal activity, including money laundering or terrorism financing. 

That creates an important practical question for art market participants: what should be treated as suspicious activity?

The DIA guidance assists by identifying money laundering and terrorism financing risks associated with high-value goods, and by setting out red flags that may indicate when a proposed or completed transaction warrants closer scrutiny.

Red flags for art market dealers

The red flags identified by the DIA are listed below in bold with our comment added:

• Use of shell companies, trusts, or third-party intermediaries to purchase, hold or sell cultural objects, including art dealers, brokers, advisers or interior designers.
  Steps to preserve the privacy and anonymity of art market participants have long been a staple of the art market and these structures may be legitimate. But by obscuring who is really behind the transaction they can also hide bad actors. The concern is greater where the arrangement appears unnecessarily complex, or where the intermediary has no clear commercial reason for being involved. 
• Cash transactions, particularly using large volumes of cash.
  Cash is difficult to trace, can be used to avoid interaction with more heavily regulated financial sectors, and can be used to place illicit funds into the legitimate economy. In the art market, cash can be converted into an asset that can later be stored, moved or resold, and used to obscure suspect provenance.
• Use of large-denomination banknotes.
  Large-denomination notes make it easier to move substantial value discreetly. Their use may simply be for ease of use, but could also suggest an attempt to avoid the transparency associated with ordinary banking channels.
• Unusually high profit margins on the sale of an item of art, antiquity or another cultural object.
  A very large profit margin may indicate that the stated price does not reflect genuine market value. Instead, it may indicate that the transaction is being used to justify the movement of funds that are actually derived from another source.
• Sales or purchases involving sellers who are not concerned with recouping their initial investment.
  Conversely, a seller who appears indifferent to loss may not be acting for ordinary commercial reasons. That can suggest the transaction is being used to move or disguise value rather than to obtain a normal market return.
• Sales or purchases of art vastly or routinely exceeding the expected sales value of the work.
  Again, overvaluation can be used to legitimise the transfer of excessive funds. This is particularly relevant in the art market because valuation can be subjective and harder to test than for standardised assets.
• Sales or purchases involving buyers who do not appear concerned about paying substantially more than the notional value of the work.
  A buyer who is unconcerned about overpaying may be motivated by something other than acquiring the work at fair value. This may also indicate an attempt to transfer funds under cover of an apparently legitimate purchase.
• Sales or purchases where the client is not familiar with, or interested in, the provenance, history, style, genre or artist of the object.
  Allowance for new or inexperienced collectors aside, art market participants usually care about provenance, attribution, authenticity and value. A lack of interest in those matters may suggest that the object is being used primarily as a vehicle for storing or moving value.
• Unwillingness to provide identification information for an art-collateralised loan, early repayment of that loan, or use of cash to pay it.
  Reluctance to provide identity information may indicate an attempt to conceal beneficial ownership or source of funds. Early repayment or cash repayment may also be used to create an apparently legitimate explanation for funds.
• Imported or exported items not declared to the relevant customs authorities.
  Failure to declare cross-border movement may indicate an attempt to avoid scrutiny. This is especially concerning where the item is portable, valuable, culturally significant, or has unclear provenance. Importantly, it may not just flag the risk of money laundering – it could also be a sign the object is looted, stolen or unlawfully exported.
• Purchase or termination of insurance policies for high-value art where other information suggests the art has a low value.
  Insurance can be misused to create a paper trail or generate a payout based on an inflated value. A mismatch between insured value and apparent market value should prompt further enquiry.
• Involvement of people or entities known to be involved in, or suspected of, trafficking in cultural objects.
  Known or suspected links to trafficking substantially increase the risk that an item is illicit. This is particularly serious for antiquities, protected objects and material from conflict-affected regions.
• Use of social media or financial intermediaries to advertise cultural objects that have been looted.
  Illicit objects may be marketed informally or through indirect channels to avoid conventional scrutiny. Social media can also be used to reach buyers quickly before provenance concerns are identified.
• Unique archaeological pieces allegedly related to existing collections, but previously unstudied.
  Previously unknown archaeological material can raise concerns about recent looting or illegal excavation. The risk is higher where there is no credible provenance, publication history or export record.
• Newly “discovered” art attributed to a prominent artist.
  A new attribution to a major artist can dramatically increase value. Without strong provenance and expert support, this may indicate forgery, misattribution, or an attempt to inflate value for laundering purposes.
• Purchases by third-party intermediaries on behalf of an ultimate seller or purchaser.
  Intermediaries can be legitimate, but they can also conceal the true party to the transaction. Dealers should be alert where the ultimate buyer or seller is not disclosed, or where the intermediary’s role is unclear.
• Transactions involving market participants without expertise in high-value purchases or sales.
  Inexperienced participants making high-value transactions may simply be new to the art world, but it may also be an indication that they are acting as fronts or nominees, or again, indicate someone is not a genuine collector and is using the object to transfer wealth. The risk is greater where the person cannot explain the commercial rationale for the transaction.
• Transactions involving politically exposed persons, or their family members or close associates.
  Politically exposed persons can present heightened corruption and bribery risks, and high value objects are often seen as good ways to buy influence given not only the value of such items but also the status that they can confer. Transactions involving PEPs require closer scrutiny, particularly where source of wealth or source of funds is unclear.
• Use of financial services to acquire, sell or ship artworks or cultural property in and out of specialist storage facilities.
  Specialist storage can be used to hold valuable assets privately and outside ordinary market visibility. Movement in and out of storage facilities may transfer control or value without a conventional public sale.
• Sale of objects originating from regions with current or historically recent armed conflict, post-1900.
  Conflict-affected regions are especially vulnerable to looting, illegal excavation and trafficking. Objects from those regions require careful provenance checks because proceeds may be connected to organised crime or terrorism financing. 

What should dealers take from this?

For high-value dealers, the key point is not that every unusual transaction is suspicious and the red flag indicators identified by the DIA do not prove wrongdoing on their own. A legitimate transaction can involve anonymity, complexity, intermediaries, unusual pricing or overseas movement etc. But where one or more red flags are present, dealers should pause and ask whether further enquiry, enhanced due diligence may be required, or a suspicious activity report warranted. 

AML/CFT compliance in the art market is therefore not just a matter of forms. It requires dealers to understand their customers, understand the object, consider provenance, identify the real parties to the transaction, and recognise when the transaction does not make commercial or factual sense.

Consideration of these factors can also help art market participants avoid other risks, including becoming the victims of crime themselves, or reducing the risk of civil or even criminal liability from involvement in transiting items where the item or circumstances may not be all they seem. 

Get advice

AML/CFT obligations for high-value dealers can be technical, and the consequences of getting them wrong can be significant. If you deal in art, taonga, antiquities or other cultural objects and are unsure whether the regime applies to you, or what steps you should take when a transaction raises concerns, legal advice can help you assess your obligations and respond appropriately.

The information on this website is general in nature and may not be current or complete. It is not intended as legal advice for any specific person, transaction or situation, and should not be relied on for that purpose. You should seek up to date legal advice before acting or deciding not to act.

Contact GCA Lawyers to find out more.