Terrorist financing continues to evolve, exploiting both traditional and non-traditional sectors. One recent high-profile case in the United Kingdom has thrust the global art market under the spotlight, revealing the critical intersections between financial crime, anti-money laundering (AML) controls, and counter-terrorist financing regulations.

In April 2024, British-Nigerian art dealer Ogeneochuko Ojiri was convicted at the Central Criminal Court (Old Bailey) for failing to report suspicious art transactions linked to Nazem Ahmad, a sanctioned individual accused of financing Hezbollah. The conviction marked the first use of Section 21A of the Terrorism Act 2000, which criminalizes the non-disclosure of information that could assist in preventing terrorist financing.

This case not only set a legal precedent but also underscored the unique vulnerabilities in the art market. The art world has long been recognized as a potential avenue for illicit flows, given its reliance on high-value, portable assets, opaque transactions, and the use of intermediaries who may not be fully regulated or aware of their obligations under the law.

The Ogeneochuko Ojiri Case and Its Legal Milestone

The case of Ogeneochuko Ojiri centers on his role as a London-based art dealer who conducted a series of high-value art transactions with Nazem Ahmad, a Lebanese businessman sanctioned by both UK and US authorities for his alleged role in financing Hezbollah. Despite being aware of Ahmad’s sanctioned status and suspected links to terrorist activity, Ojiri facilitated sales totaling approximately £140,000 without making the legally required disclosures under anti-money laundering and counter-terrorist financing laws. The UK’s Crown Prosecution Service charged Ojiri with eight counts under Section 21A of the Terrorism Act 2000 for his failure to report these suspicious transactions. His conviction at the Old Bailey marked the first time a person in the UK art market was found criminally liable for withholding information that could prevent terrorist financing, resulting in a custodial sentence and the seizure of artworks valued at nearly £1 million.

Terrorist Financing and Legal Frameworks: The Section 21A Breakthrough

The concept of terrorist financing, as codified in the UK’s Terrorism Act 2000 and reinforced by subsequent legislation such as the Proceeds of Crime Act 2002 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, revolves around the collection or provision of funds with the intention or knowledge that they will be used for terrorism.

Section 21A of the Terrorism Act 2000 specifically places an obligation on those in regulated sectors, including art dealers, to report knowledge or suspicion that another person is engaged in terrorist financing. The legislation is designed to close gaps that allow financial crime to flourish by ensuring those at the front lines of high-value transactions act as gatekeepers.

Ojiri’s conviction was historic because it demonstrated that ignorance or selective blindness is no longer a viable defense. The prosecution established that Ojiri knowingly facilitated the purchase of artworks valued at approximately £140,000 by Ahmad, despite Ahmad being on UK and US sanctions lists since 2019 for financing Hezbollah’s activities. By failing to file a Suspicious Activity Report (SAR) and by actively concealing Ahmad’s identity through alias use and altered invoices, Ojiri violated his statutory duty under the UK’s AML and counter-terrorism laws.

This legal outcome not only affirmed the scope of the Terrorism Act but also reinforced the necessity for robust AML compliance across all high-value dealers, including those dealing in art, antiques, and luxury goods.

AML Compliance Failures and the Art Market’s Unique Risks

The art market, both in the UK and globally, presents a number of specific AML and terrorist financing risks. These include:

• High-value and easily movable assets, such as paintings and sculptures, can cross borders without attracting significant regulatory scrutiny.
• The prevalence of intermediaries, agents, and shell companies makes it difficult to establish the true beneficial owner of an artwork.
• Discretion and confidentiality norms that can be weaponized to obscure illicit transactions.
• Varying levels of regulatory oversight, with some dealers unaware or inadequately trained in their legal obligations.

In response, the UK government expanded the scope of AML regulation in January 2020 by designating art market participants (AMPs) as obliged entities under the Fifth Money Laundering Directive (5MLD), now transposed into UK law. This requires art dealers handling transactions above €10,000 (or the equivalent in pounds) to conduct due diligence, file SARs where appropriate, and maintain comprehensive records.

The Ojiri case demonstrated what can happen when these controls are ignored. Prosecutors highlighted how Ojiri failed to conduct proper due diligence, overlooked red flags regarding Ahmad’s status, and attempted to manipulate documentation. Such failures not only facilitated the potential movement of illicit funds but also exposed the dealer, and by extension the wider sector, to significant reputational and criminal liability.

The court further heard that authorities were able to seize artworks held in storage, including works by globally recognized artists, with values approaching £1 million, showing that effective enforcement can extend beyond the immediate proceeds of crime to encompass assets derived from suspicious or criminally linked transactions.

Strengthening AML Compliance: Lessons for High-Value Dealers

The outcome of this landmark case carries critical lessons for all art market professionals and high-value dealers:

• Know Your Customer (KYC) Procedures: Comprehensive customer due diligence is not optional. Dealers must identify and verify clients, especially for high-value transactions, and establish beneficial ownership. This includes screening against sanctions and PEP (politically exposed person) lists.
• Suspicious Activity Reporting: Any suspicion or reasonable grounds to suspect terrorist financing or money laundering must result in the immediate filing of a SAR to the UK’s National Crime Agency (NCA). Failure to do so can result in criminal prosecution under both AML and CTF legislation.
• Record-Keeping and Documentation: All transactions, client records, and due diligence evidence must be retained for a minimum of five years under UK regulations. Attempts to conceal or alter documentation significantly increase regulatory and legal exposure.
• Training and Awareness: Ongoing staff training is essential to ensure that all employees and agents are aware of AML and CTF obligations. This includes recognizing red flags such as unusual payment structures, reluctance to provide identification, or efforts to circumvent standard procedures.
• Sanctions Compliance: Regular screening of clients and counterparties against UK, EU, US, and UN sanctions lists is essential. Ignorance of a client’s sanctioned status is not a defense in the eyes of the law.

The UK’s Financial Conduct Authority (FCA), the National Crime Agency, and international bodies such as the Financial Action Task Force (FATF) all provide clear guidance for the art market and high-value dealers on these points.

The Future of Counter-Terrorist Financing in the Art Market

The conviction of Ogeneochuko Ojiri marks a significant evolution in the regulatory landscape for the UK art sector and similar markets worldwide. Authorities have sent a clear signal that AML and CTF compliance is not merely a bureaucratic exercise but a critical component of the fight against terrorism and financial crime.

Several trends are likely to shape the future response:

• Increasing Digitalization: The rise of digital platforms for art sales creates new opportunities for both compliance and abuse. Dealers must adapt existing AML programs to address risks associated with online transactions, digital art, and the use of cryptocurrencies.
• Enhanced Data Sharing: International cooperation and data-sharing initiatives between enforcement agencies and financial intelligence units will strengthen the detection of cross-border terrorist financing networks.
• Stricter Enforcement: High-profile prosecutions, asset seizures, and regulatory fines are likely to increase as authorities use new powers to tackle money laundering and terrorist financing in non-traditional sectors.
• Sector-Specific Guidance: Ongoing publication of risk-based guidance and red flag indicators by national authorities and global standard-setters will help the art market better identify, mitigate, and report suspicious activities.

Importantly, the art market’s role in facilitating or preventing terrorist financing will remain under close scrutiny. As the regulatory net tightens, dealers who fail to prioritize compliance will face growing legal, financial, and reputational risks.

Conclusion: Turning Compliance Lessons into Sector-Wide Change

The UK’s first successful prosecution for failing to report terrorist financing through art transactions demonstrates the serious consequences for those who ignore AML and CTF laws. The case against Ogeneochuko Ojiri was not simply about one individual’s actions, but rather a warning for the entire art market and other high-value sectors that criminal liability awaits those who do not meet their obligations.

Strengthening AML compliance, investing in robust due diligence, and fostering a culture of proactive reporting are not just regulatory requirements but essential components of responsible business in the modern era. The art market, often prized for its secrecy and exclusivity, must now become a bulwark against illicit finance. Vigilance, transparency, and a genuine commitment to the law will define the future of this sector and its role in the wider fight against financial crime and terrorism.

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Related Links

• UK Terrorism Act 2000 (legislation.gov.uk)
• UK National Crime Agency – Suspicious Activity Reports Guidance
• Financial Conduct Authority – Guidance for Art Market Participants
• Financial Action Task Force – Guidance for Dealers in Precious Metals and Stones
• Money Laundering Regulations 2017 (legislation.gov.uk)

Other FinCrime Central News About Hezbollah Financing Networks

• Hezbollah Financier Sentenced for Role in La Shish Conspiracy
• Massive $1.8Bn Terrorism Financing Network Linked to Hezbollah Uncovered
• FinCEN Issues Alert to Hezbollah and Terrorism Financing

Source: PUNCH, by Samuel Omotere

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