Most Read Contributor in British Virgin Islands, August 2016
The art finance market has seen an unprecedented boom in recent
years, buoyed by changing perspectives amongst wealth management
players and art collectors. Wealth managers increasingly see art as
an integral part of any wealth management offering, while to art
collectors, it is a valuable capital and investment asset.
The growth of the art-secured lending market has been
accompanied by a parallel increase in the array of financial
products and services specifically crafted for art collectors and
dealers. Whilst the US sphere is dominated by private banks,
auction houses such as Christie's and Sotheby's have also
established finance arms. Loan facilities range in size and
complexity – from the thousands to millions of dollars and
from acquisition, personal loan, working capital, bridging, trade
finance facilities to factoring and minimum price guarantee
arrangements – often secured solely against portfolios of
Companies incorporated in the BVI are, by most measures, the
most popular offshore holding structures in the world and it is
therefore not uncommon for art to be owned through BVI structures.
For both borrowers and lenders there are many advantages in doing
Given the regulatory requirements placed on financial firms, the
art finance market is not as murky as it is often painted out to
be. Art-market transactions are becoming more transparent,
traditional informal arrangements are increasingly being replaced
by written agreements, and careful due diligence is now the norm.
The BVI is well placed to keep pace with the evolving regulatory
landscape for the art finance market, and already has in place
measures to identify ultimate beneficial owners and understand
customers (KYC) and therefore reduce the risk of abuse of the art
finance industry by money launderers.
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