The collapse of communism in the other post-Soviet states, along with China’s turn toward capitalism, only added to the kleptocratic fortunes that were hustled abroad for secret safekeeping. Officials around the world have always looted their countries’ coffers and accumulated bribes. But the globalization of banking made the export of their ill-gotten money far more convenient than it had been—which, of course, inspired more theft. By one estimate, more than $1 trillion now exits the world’s developing countries each year in the forms of laundered money and evaded taxes.
Art and antiquities dealers do not fall under the BSA's directives, yet they are susceptible to money laundering. Like other trades and businesses, they are required to file Form 8300 when they receive more than $10,000 in cash, cashier's checks, bank drafts, traveler's checks, or money orders either from a single or several related transactions. But they are not part of the BSA's reporting, recordkeeping, and anti-money laundering program requirements even though they sometimes receive large amounts of cash for high value goods.
Bloomberg reported Friday (April 5) that Commercial Bank of Ivanovo, which is 80 percent owned by former North Carolina Republican Rep. Charles Taylor, had its license revoked because, as the Russian central bank said, it “regularly” broke regulations governing anti-money laundering rules. In addition, the bank also misrepresented the size of provisions, and inflated its capital through the use of “schemes,” as the newswire reported.
Money laundering has been increasing. A key factor behind the growing money laundering is ineffective enforcement of money laundering laws locally. Perhaps because of the lack of importance that has been given to the subject, since the 21st century started, there was not jurisprudence regarding the laundering of money or assets, or the conversion or transfer of goods. Which is even worse, the laws of the Latin American countries have really not dealt with their study in a profound way, as it is an issue that concerns the whole world and is the subject of seminars, conferences and academic analysis in different regions of the planet. Now a new figure that is being called the Economic Criminal Law is being implemented, which should be implemented in modern societies, which has been inflicted enormous damage to the point of affecting the general economy of the states. Even though, developing countries have responded and continue to respond, through legislative measures, to the problem of money laundering, at national level, however, money launderers, have taken advantage of the lax regulatory environment, vulnerable financial systems along with the continued civil and political unrest of most the developing countries.
The Ukrainians hired Skadden through a middleman, the now-jailed political consultant Paul Manafort. Once upon a time, it might have been possible to think of Manafort as a grubby outlier in Washington—the lobbyist with the lowest standards, willing to take on the most egregious clients. But Mueller has exposed just how tightly tethered Manafort’s work on behalf of Ukrainian kleptocrats was to Washington’s permanent elite. Manafort subcontracted some of his lobbying to the firm of Tony Podesta, arguably the most powerful Democratic influence-peddler of his generation. And Manafort employed Mercury Public Affairs, where he dealt with Vin Weber, a former Republican congressman and a former chairman of the National Endowment for Democracy.
Reports alleging widespread money laundering, often via Baltic nations, date back years but attracted broader attention only after squeaky-clean Denmark took a center role. In March, a global consortium of investigative journalists published a report, based on data obtained from a failed Lithuanian lender, describing a vast money-laundering network, which it dubbed the Troika Laundromat. It highlighted a prominent Russian investment bank, Troika Dialog, which was taken over in 2012 by state-controlled Sberbank. U.S.-born investor William Browder, who ran one of the largest foreign funds investing in Russia in the 1990s, has alleged for years that $230 million was stolen from the Russian government by corrupt Russian officials and that his Russian tax lawyer, Sergei Magnitsky, was jailed while trying to expose the fraud. (Magnitsky died in a Russian prison in 2009.) Browder became an outspoken critic of Vladimir Putin’s government and has been crusading for justice for Magnitsky.
That history might explain why it took 24 years for Sandler to finally return to SNL to host the show, an honor that’s pretty typical for any departed cast member who goes on to stardom. Sandler has made two brief, uncredited appearances since 1995, and showed up for the big 40th-anniversary special, but in the time between his departure and last night’s hosting spot, he was essentially absent. He acknowledged that awkwardness early on in his monologue: He sang a song about how the executive producer Lorne Michaels fired him, inviting Rock onstage to share the same story and quipping, “Then I made over $4 billion at the box office, so I guess you could say I won,” in the strangely gruff, deadpan, yet somehow infantile voice that made him a comedy star.
Why a painting to launder the money? Because the art business is impenetrable by outsiders: it’s a world limited to highbrow art connoisseurs, dealers, and wealthy collectors, where the prices are whatever they want them to be. Here, $9.2 million, although the painting failed to sell at a much lower price estimate years before. And as the defendants in the Green case explained to their client, the art business is “the only market that is unregulated” by the government. It seems that the players in the art world make up their own rules, unchecked by any authority, making this elusive quality of the business the perfect “hotbed” for corrupt activity.
In passing campaign finance laws that ban foreign nationals from contributing to U.S. political campaigns, Congress has made it clear that protecting the political sovereignty of the United States means protecting our elections from foreign money.232 These laws are meant to ensure that no member of Congress, much less the president, holds a foreign allegiance purchased with help for their campaign. They also ensure that U.S. elections reflect the will of the American people, not foreign individuals—and especially not foreign governments.
Much the same can be said of the Trump Organization’s deal in Baku, Azerbaijan, which, according to the Transparency International Corruption Perceptions Index, is among the most corrupt nations in the world. The family with whom the Trump Organization was partnering on Trump Tower Baku, the Mammadovs, is reported to be notoriously corrupt. According to Davidson, in 2008, Ziya Mammadov, the family’s patriarch and the nation’s Transportation Minister, “awarded a series of multimillion-dollar contracts” to an Iranian construction company whose chairman has been tied to the Iranian Revolutionary Guard, which in turn has frequently been accused of drug trafficking, sponsoring terrorism, and money laundering. These connections could suggest that the Iranian Revolutionary Guard was exploiting the Mammadovs’ real-estate business and, by extension, the Trump Organization’s interests in Azerbaijan, to launder money that has passed through terrorist and other international organizations. (According to Davidson, the Mammadovs, the Justice Department, and the White House all declined to comment on his reporting.)
John Madinger, the former Treasury official, said that, in any deal that might involve money laundering, there is one critical question: “Does the financial transaction make economic or business sense?” In recent years, a lot of residential housing has been built in Batumi, but most of it has consisted of what Colliers, the market-analysis firm, calls “low-segment”—down-market—apartments. The Trump Organization, with its extensive experience in the luxury real-estate market, could surely sense that it would not be easy to enlist hundreds of wealthy people to buy multimillion-dollar condominiums in Batumi. I asked several New York real-estate developers to assess the proposed tower. One laughed and said that the Batumi deal reminded him of “The Producers,” the Mel Brooks movie about two charlatans who create a horrible musical designed to fail. Another New York developer, who spent years making deals in the former Soviet Union, told me, “A forty-seven-story tower of luxury condominiums in Batumi is an insane idea. I wouldn’t have gone near a project like this.”
First, critics argue that the Act would impose “burdensome regulations” for little purpose, since verifiable cases of money laundering in the art industry are rare. However, an absence of money laundering prosecutions does not mean that money laundering crimes do not occur. In fact, reporting requirements may highlight a problem that so far has flown under the radar. The BSA already applies to small businesses in other industries with high money laundering risk—currency exchanges, issuers of money orders, travel agencies, and dealers of precious metals and jewels—without crippling those industries. And unlike commodities with a set price, such as precious metals and jewels, the subjective dollar value of artwork makes it an industry even more suited to money laundering. The Act would impose much needed transparency on an industry that is otherwise hard to audit. The Picasso painting that Green offered to sell to the undercover FBI agent, much like many pieces of art, has a secretive history—it was previously part of a number of “private” collections and belonged to an “unknown” buyer. It was even unclear whether Green was the actual owner of the painting or selling on behalf of someone else. And art dealers like Green often fudge their own commissions to make the sales seem legitimate—to prevent auditors from accusing them of being “in the money laundering business”—leaving little information to help detect whether money laundering is behind any given art sale.
Bank employees, such as tellers and customer account representatives, are trained in anti-money laundering and are instructed to report activities that they deem suspicious. Additionally, anti-money laundering software filters customer data, classifies it according to level of suspicion, and inspects it for anomalies. Such anomalies include any sudden and substantial increase in funds, a large withdrawal, or moving money to a bank secrecy jurisdiction. Smaller transactions that meet certain criteria may also be flagged as suspicious. For example, structuring can lead to flagged transactions. The software also flags names on government "blacklists" and transactions that involve countries hostile to the host nation. Once the software has mined data and flagged suspect transactions, it alerts bank management, who must then determine whether to file a report with the government.
Why was Britain the only country that declined to act on the information Browder provided? His conclusion was that too many influential people – lawyers, bankers, accountants, property developers – were dependent on dirty Russian money for their livelihoods. “If that money was stopped,” he said in 2016, “certain people would find themselves without businesses, and I think those people have political weight in this country.”
Reverse money laundering is a process that disguises a legitimate source of funds that are to be used for illegal purposes. It is usually perpetrated for the purpose of financing terrorism but can be also used by criminal organizations that have invested in legal businesses and would like to withdraw legitimate funds from official circulation. Unaccounted cash received via disguising financial transactions is not included in official financial reporting and could be used to evade taxes, hand in bribes and pay "under-the-table" salaries. For example, in an affidavit filed on 24 March 2014 in United States District Court, Northern California, San Francisco Division, FBI special agent Emmanuel V. Pascau alleged that several people associated with the Chee Kung Tong organization, and California State Senator Leland Yee, engaged in reverse money laundering activities.
This episode underscores an important point: The public must try to piece together what may have transpired in the 2016 election from a dearth of information. Although incredibly useful as an investigative tactic, following the money is not easy. Analysis of the identified suspicious transactions provides more questions than answers. But while an analysis of the publicly known transactions cannot answer all the questions about Trump’s involvement with Russia, they do show a significant nexus between his political campaign and Russian money and suggest a number of important avenues for further oversight and investigation.
Bouvier denied any involvement in the thefts, but in September 2015 he was indicted by French authorities on charges of theft in relation to the discovery of two of the works by Picasso that Hutin-Blay alleged were stolen from her. In court, Bouvier produced a document meant to certify that he paid Hutin-Blay for the two paintings, to the tune of $8 million, to a fund in Liechtenstein. Hutin-Blay has disputed this, arguing that the payment concerned a matter unrelated to the thefts.
The reborn Salvator Mundi was unveiled at London’s National Gallery in 2011 to much fanfare, although you’d be hard-pressed to find mention of the masterpiece in the gallery’s official guide. You can read a back-pedaling attribution to Da Vinci in the Gallery’s statement: “an important opportunity to test this new attribution by direct comparison with works universally accepted as Leonardo’s.”
Fourth, while there are some legitimate reasons to preserve the anonymity of art collectors to the public at large, such as to avoid potential threats and burglaries, there is no good reason to keep information on ownership of, and transactions in, valuable artwork secret from government regulators, especially given that this opacity makes the art business extremely difficult to monitor. Imposing disclosure requirements, not to the public but to a regulatory body, would help guard buyer and seller anonymity while protecting the integrity of art sales and ensuring that dirty transactions (such as Green’s “I sell you to you and then you sell back to me”) are uncovered.
This panel will be part of a day-long forum at the University, co-hosted by Professor Alexander Cooley, Associate Professor Tonya Lee Putnam and Adjunct Professor Matthew Murray. The Forum aims to stimulate in-depth discussion among academics and professionals and generate systemic and innovative solutions to counter the rise of kleptocracy. Other panelists will explore law enforcement and expanding the Foreign Corrupt Practices Act, as well as the challenges of investigating and researching oligarchs. The event will feature leading U.S. experts and scholars from law enforcement, academia, journalism, and finance.
Video from Trump’s visit to Georgia provides further evidence that Tatishev was a key part of the Silk Road Group—and suggests that Trump recognized his importance. During a speech that Trump gave in Tbilisi, Tatishev can be seen sitting in the audience next to Ramishvili. Trump says, “We have two great partners.” He points toward the seats where Tatishev and Ramishvili are sitting. “And they’re going to do a fantastic job.” (Giorgi Rtskhiladze, the Silk Road Transatlantic Alliance executive who met me in Manhattan, told me that Trump must have thought it was him, not Tatishev, sitting next to Ramishvili. But Rtskhiladze and Tatishev look nothing alike: Rtskhiladze is clean-shaven, with light-colored hair; Tatishev is nearly bald, with dark facial hair.) Tatishev accompanied Trump to meet Saakashvili at the Presidential Palace, in Tbilisi. When Michael Cohen, the Trump Organization executive, went to Georgia in 2010 to discuss building a tower with the Silk Road Group, he also met with Tatishev. A representative of the Silk Road Group said that Tatishev is a friend of Ramishvili and simply wanted to say hello to a big American tycoon. Inviting friends to important business meetings, the representative said, is common practice in the Caucasus region.
It’s important to keep this trait in mind when trying to make sense of the Russia story. Trump’s affinity for Russia, after all, is causing problems for him. It has created tensions with his own staff and his Republican allies in Congress. Most voters now believe he has something to hide. And the constant talk of Russia on television clearly enrages Trump.
The above-discussed Trump fundraisers and donors raise serious questions about potentially illicit activity throughout the campaign and the presidential transition. Appointing the likes of Broidy, Gates, and Cohen to fundraise for the Trump campaign was no coincidence. Trump’s troubled business path, like his campaign trail, is littered with associates accused of corruption, money laundering, and tax fraud. In fact, Trump has confronted similar allegations over the course of decades.197 For example, Trump’s casino businesses—under the Bank Secrecy Act regulated more stringently than real estate—have confronted record-breaking money laundering fines from the Treasury Department.198 The New York attorney general is currently suing the Donald J. Trump Foundation, alleging “Extensive And Persistent Violations Of State And Federal Law.”199 According to The Wall Street Journal, New York federal prosecutors are now investigating Trump’s inaugural committee, examining whether donations were given “in exchange for access to the incoming Trump administration” and whether the committee may have “misspent” funds.200
Los Angeles-based editor of Politech, ex-Soviet computer lobotomist. Specializes in, but not limited to, science, AI, the web, conspiracy theories, and statistics. His work has been featured in or mentioned by How Stuff Works, BusinessWeek, Discovery News/Seeker, The Shift With Drex, Le Monde, SEED, Bad Astronomy, Science To The People, i09, and RawStory, among others.
Another of Bykov’s clients was the Russia-based Prevezon Holdings, an investment company that Natalia Veselnitskaya represented in a civil forfeiture matter the DOJ brought against it.117 Veselnitskaya is the very same Russian attorney Agalarov sent to the Trump Tower meeting. In fact, at the time of the meeting, Veselnitskaya was in New York for a Prevezon hearing, helping to argue the company’s innocence following allegations of large-scale money laundering.118 As with Agalarov, Bykov had registered several of Prevezon’s U.S. subsidiaries, though he has denied any wrongdoing. Prevezon ultimately settled the matter with the DOJ, agreeing to pay $5.9 million to resolve the claims, while maintaining its innocence.119
Raiffeisen Bank International AG led declines in European banking shares on Tuesday -- slumping as much as 15 percent -- after Bill Browder’s Hermitage Fund said the bank ignored warning signs that would have helped stop the laundering of funds from Russian criminal activity. Dutch banks fell after a report that the three largest were used to move cash from Russia.
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The warm welcome has created a strange dissonance in American policy. Take the case of the aluminum magnate Oleg Deripaska, a character who has made recurring cameos in the investigation of Russian interference in the 2016 presidential election. The State Department, concerned about Deripaska’s connections to Russian organized crime (which he has denied), has restricted his travel to the United States for years. Such fears have not stood in the way of his acquiring a $42.5 million mansion on Manhattan’s Upper East Side and another estate near Washington’s Embassy Row.
And the Trump Organization reportedly welcomed the clientele. For example, a 2013 article in The Nation about the influx of Russian money in Miami real estate noted that Elena Baronoff, a Russian American socialite once described on the cover of a Russian magazine as “the Russian Hand of Donald Trump,” operated a real estate company out of the lobby of the city’s Trump International Beach Resort that catered to Eastern European buyers. The New Republic has also extensively documented how the Trump Organization actively sought Russian buyers, so much so that the area around Trump Sunny Isles in Florida became known as “Little Moscow.” Though these transactions are not inherently suspect, they demonstrate that the Trump Organization was sufficiently aware of its reliance on Russian money to actively cultivate relationships with Russian clients.
African African Leadership Forum AML AML/CFT anti-money laundering Asean states Bangladesh bank closures Bank Secrecy Act beneficial ownership China Compliance Correspondent counter illicit fund flows de-risking ECA FATF FCA Federal Deposit Insurance Corporation Financial Action Task Force Financial crime Financial Transactions and Reports Analysis Centre of Canada FinCEN fined Fraud guidance human trafficking IMF India Indian international money transfer Iran KYC Legal Entity Identifier misinvoicing money-laundering regulations Money laundering National Board of Revenue (NBR) Pakistan Partnership on Illicit Finance TBML trade-based financial crimes trade based money laundering UK Auditor under-invoicing UN Economic Commission for Africa US Treasury Department whistleblower
Of course, beyond AML-related process concerns, any art dealer — just like any business person — always must remember that just about any financial transaction that involves proceeds known to have originated from illegal activity represents a criminal money laundering offense. Stated otherwise, even if the BSA is not expanded to include dealers in art and antiquities, those in the U.S. art industry still need to bear in mind, in extreme examples, the omnipresent federal criminal code. Sometimes, the provenance of the funds can be more critical than the provenance of the art.