Money Laundering & Art: The Law Vs. the Perception of the Law

Today there appeared on the front page of the New York Times an article, “Valuable as Art, but Priceless as a Tool to Launder Money” (click to read). About a month ago we sent out a commentary, “The Raid: A Highly Regulated Art Market in Sight,” (click to read) with a N.Y. Times article attached, “Agents Descend on New York Gallery, Charging its Owner” (click to read).

Today’s article highlights an untenable shipment into the U.S. of a multi-million dollar Basquiat valued at $100 for import purposes. The article’s focus is that there are no safeguards on money laundering in the art market. However, the Times is mistaken. The art market and its participants are subject to the same money laundering, tax evasion, fraud, and other laws applying to transactions as any other business. That these laws are sometimes ignored, intentionally or inadvertently, by art dealers et al., who become enablers to illegal transactions is the issue.

It is true that a blatant criminal transaction was stopped in its tracks, but who were the counter-parties? Was the picture sold and paid for? Was it to be sold and paid for? Did the counter-party do its required due diligence?  If sold, was the payment to go to an unnamed account or a named bank account of the owner of the picture? What was the end buyer, if transacted, told of the provenance? The list goes on and doesn’t only apply to simple money laundering fraud. It applies to much more elaborate schemes which break multiple laws that are not exclusive to any asset class or industry, but are all encompassing.Though there is a highly regulated market in sight there will be many such law enforcement activities within the industry in advance and concurrently with the coming regulation.


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