Michel: Well, by the time I was 15 I had been kicked out of seven schools. I must have been ADHD or whatever, because I fucking hated school and was always looking to start something for myself. So I began importing cheap hippie coats from Istanbul. They were basically sheepskins turned inside out with some sleeves on them. I began selling them in this hashish bar in Holland. They sold like fucking hotcakes. So I was going up and down between Istanbul and Holland quite a lot. Business was going well, and I was eventually approached in Istanbul by a man named E.

Both Bouvier and Rappo would deny the charges, hire lawyers, and spend the following months telling their stories to the media. Bouvier's defense was simple: Yes, he had charged astronomical markups to his client, but, as he told Vanity Fair, "I did not act as intermediary but as the owner [of the art]. I had a right to a profit; it's the law of busi- ness." (Bouvier refused to answer questions for this article.)
“The tax laws in art make it basically legal to not pay taxes on art. If you’re a serious art buyer, you just get a good tax accountant,” former New York-based art consultant Beth Fiore tells Hopes&Fears. “If you show newly purchased works in certain museums then you never have to pay taxes on it.” Edward Winkleman of Winkleman Gallery maintains that his gallery keeps fastidious records of all transactions and pays taxes even on cash sales. But he admits that, “the state generally wouldn't question what is reported.” He also tells us that individual sales don’t need to be reported, only the totals for each quarter. Hypothetically, someone could buy millions of dollars worth of art without the IRS knowing, and then later sell those works for a “legitimate” profit that looks clean on taxes.
Regardless of whether this provision ultimately is enacted, the underlying issue will persist.  This post discusses some of the general concerns that the art and antiquities world can be misused as a conduit for dirty money.  We then discuss the AML Standards for Art Market Operators proposed by the Basel Institute on Governance, and similar standards set forth by the Responsible Art Market, both of which attempt to set forth a framework for those in the business of trading art to mitigate their money laundering risks.
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Last year, when she found out Elena had been arrested, she says she got nervous; she calls the event a turning point in her relationship with Dmitry. (If so, Rybolovlev says he didn't notice—Rappo still showed up for events he held.) The arrest had taken place during a visit to Cyprus, where Rybolovlev has considerable financial assets, including at one time a large stake in the country's biggest bank. Rappo says Rybolovlev told her, "There are three places in the world I can do whatever I want. One is Cyprus, one is Skorpios, and the other is Monaco." And she claims he had Elena arrested—even though she spent only a short while in custody—to scare her into dropping her lawsuits (filed in several countries) in pursuit of her ex-husband's money.


"To put the mother of your two children in prison just not to give her money—what kind of person is that?" Rappo says. "This is the style of Mr. Rybolovlev, and that's exactly what happened to us. He wants to humiliate people and put such stress on them that they give up." (Rybolovlev brushes all this off and says Elena cannot stand to hear Tania Rappo's name.) I put it to Rappo: Why would Rybolovlev target her and Bouvier if not for the money he says they owe him?


When addressing the KYC procedures under Guideline 3, the AML Guidelines explain that establishing a client’s risk profile will require an art business to obtain information on the client; understand the purpose and intended nature of the transaction; and understand the client’s source of wealth and how they acquired their art collection.  The AML Guidelines also stress the need to identify beneficial ownership, “even if the contracting client raises confidentiality concerns,” and note that the art business “may also choose to include appropriate warranties and representations in their agreements with their clients to emphasise the importance of this point.”  Further, art businesses should peform due diligence on intermediaries, such as art advisors or brokers, acting for one of the parties to a transaction.

“Russia had no institutional instruments for regulating this new commercial environment. The courts didn’t function. They didn’t know what dispute resolution in business actually was. And so everyone engaging in the new commerce had to employ their own security force in order to ensure the integrity of their business contracts. These guys were called privatised law enforcement agencies by sociologists but they are quite simply the Mafia,” he says.
Recently, some countries in Europe, including Luxembourg and Switzerland, have passed laws to clamp down on money laundering in the art market. Starting in 2016, Switzerland will cap cash transactions at 100,000 Swiss francs ($135,000). Payments above that cash limit will have to be made by credit card, creating a paper trail, or the seller will have to carry out due diligence to ensure the legal origins of the funds.

Well, I'd been on the run and was eventually arrested at my villa in Marbella.I knew one of the Italian godfathers of the mafia who also has a villa there. We are great friends. So within ten minutes of being arrested, his counsellor was in my cell. He said, "Felice cannot come but he sent you his kind regards," so then I was sent to Madrid where I dined with a very important member of the police. He arranged for me to go to prison there instead of being extradited to France where they were really after me. I had the best time of my life in jail [in Madrid]. I had the guarantee I was coming out in a year and I bought a cell phone from one of the ETA boys in there. It was like that movie Goodfellas. I had my own kitchen, my own shower, and every day I could bribe one of the guards to go to the market-it was fantastic.
The Toulouse-Lautrec work, “Au Lit: Le Baiser,” consigned for sale at Sotheby’s in London in 2015, depicts two women embracing on a bed. The Swiss dealer who brought the work to Sotheby’s, Yves Bouvier, signed the standard paperwork surrounding such a sale, which requires the consignor to indicate he or she either owns the painting or is authorized to sell it. After the sale, he was given the proceeds.

Rapid and dramatic rises—and collapses—in price are bad things for money laundering whose sole purpose is to find a relatively stable vehicle to mask the source of funds. Money launderers are not looking to make a profit on their purchases let alone a killing. In fact, a money launderer is willing to take a loss on the vehicle that hides the illicit source of the funds because that is the price of washing the money. If a money launderer buys something with dirty money that has the potential to be unsalable for clean money, it doesn’t work. Art, even some of the world’s best art, is often temporarily unsalable for a variety of real and legitimate reasons.
"[If ] he would have asked me," she says, "I would have told him." The question echoing around the art world is how one of the world's richest, toughest investors—whose trusts own the penthouse at 15 Central Park West (bought for $88 million in 2012 and occupied by his daughter Ekaterina, a college student at the time); two entire Greek islands (Sparti and Skorpios, famous for hosting Jacqueline Kennedy's wedding to Aristotle Onassis); the Maison de l'Amitié (a Palm Beach mansion bought from Donald Trump for $95 million, which Rybolovlev reportedly intends to demolish due to mold problems); a $20 million property on Kauai bought from Will Smith; a $100 million yacht; homes in Gstaad, Geneva, Paris, and Monaco; and AS Monaco, the soccer team—could make himself so vulnerable. Was he, like many new billionaires, in such a hurry to build a glittering collection that he failed to "learn art," as experienced patrons know one must to avoid overpaying? The art market is often described as insider trading conducted by a small but sophisticated network of "experts" who prey upon the naïveté of the nouveau riche. Did Rybolovlev, a famously shrewd and strategic investor, underestimate its ability to confound and deceive? Until now he hadn't talked.

So far, the release of transcripts of Fusion GPS founder Glenn Simpson’s interviews with the House Intelligence and Senate Judiciary committees have provided rich detail to obsessives but few major headlines for the average reader. The interviews give some more clarity on how Fusion came to investigate Donald Trump; who was paying the company; and how it gathered information, but they offer much help in assessing the Trump dossier.
But what we’re seeing is a pattern of Trump in the midst of wealthy foreigners engaged in money laundering schemes that center around real estate, and not bothering to vet any of them before doing business. Furthermore, there’s also the fact that he proudly claims to be the owner of more than 500 companies with very complex finances, which is a massive red flag in this context.
Perhaps the most interesting thread is Simpson’s suggestion that the Trump Organization could have been used by Russians to launder money—an arrangement that would have both allowed Kremlin-linked figures to scrub cash and would have created possible blackmail material over the now-president, since the Russian government would be aware that a crime had been committed.
When confronted, his company merely says that it’s not involved in any deals beyond licensing a brand name and image. In fact, his blinders about the identity of those backing Trump Towers Baku is a repeat of a 2010 deal in which a state-run Russian bank, which serves as a slush fund for Putin’s projects and is directly overseen by him was indirectly involved in a textbook case of money laundering.

Speaking on the sidelines of the Art Business Conference, Pierre Valentin, head of the art law practice at London law firm Constantine Cannon, said laundering illicit funds through the art market was seductive because purchases at auctions "can be anonymous and it's a moveable asset. You can put the art on a private plane and take it anywhere. Plus there is no registration system for art."

Consistent with general AML principles, the AML Standards stress that beneficial ownership may be obscured behind multiple layers of intermediaries, such as shell companies or offshore companies involving trusts. The AML Standards further provide a list of possible red flags for identifying increased risks of money laundering presented by a client that:
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