Tucked behind Kensington Palace and protected by armed police at checkpoints on either end is the street known as Billionaire’s Row, the most expensive in London and perhaps the world. A private road owned by the Crown Estates, traffic is light and slow here, and a prohibition on photography is enforced by the private security guards who watch over every other house.
Further, and as noted, other traditional vehicles for laundering money have become less attractive, thereby driving those who need a mechanism to launder large sums into the arms of the art world. As we repeatedly have blogged, one of the most time-honored and relatively convenient vehicles for laundering — real estate — is under intense scrutiny and now is subject in the U.S. to the Financial Crimes Enforcement Network (“FinCEN”)’s ongoing Geographic Targeting Orders (these require U.S. title insurance companies in many parts of the U.S. to identify the natural persons behind legal entities used in purchases of residential real estate involving $300,000 or more and performed without a bank loan or similar form of external financing).
Creating and maintaining hundreds of LLCs to ostensibly do the same thing, like build hotels, condos, and homes, adds millions in bureaucratic overhead from payroll to tax filings. It wouldn’t be an issue if Trump ran a dozen corporations specializing in each vertical of his business, so having multiple companies under one umbrella is not at all unusual. Having so many doing the same things, however, is typically the same kind of warning sign for money laundering as being constantly told to recruit new salespeople is to pyramid schemes.
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.