The Art Business should examine the client’s background and purpose behind the contemplated transaction. For example, are the artworks being sold by the client consistent with what is known about the client’s collection? Is the level at which the client is selling or buying consistent with their past transactions and what is known about their professional activities and personal wealth? If not, the Art Business may want to ask the client for further information.

Buried treasure, mysterious deaths, looting, forged documents, secretive Swiss bank vaults and shadowy intermediaries. This is not a description of a Dan Brown thriller. It’s real life: the trade in illegally exported antiquities. As prices soar into the millions of dollars for the top pieces, so does the incentive to dig up treasures in Italy, Greece, Turkey and farther afield, pass them to “runners” who will sneak them illegally across borders, store them in a Swiss vault and then quietly slip them into the trade. The players in this murky world can make a fortune, but this is a dangerous game.
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.…
Contact an art advisor to help you find a buyer for your work or see if an auction house like Sotheby’s or Christie’s wants to auction it for you. If they help you sell your collection, they will make money, so it’s in their best interest not to ask any questions. Make an appointment with an auction house to appraise the pieces in your collection. You’ll sign a contract that says you are allowing the auctioneers to sell your collection on consignment, which means if it sells you get paid, and if it doesn’t you get the art returned to you. It will also tell you what sort of fees you will be charged - like insurance, shipping, and the auction house’s cut. You’ll ship the work to the auction house, wait for your collection to be sold, and make it rain.
At the same time, Trump partnered with a real estate developer called Bayrock, founded by Soviet-born Tevfik Ariv who set up office in Trump Tower. In 1999, Russian-born former gangster implicated in a Wall Street pump-and-dump scheme and money laundering, Felix Sater, joined Bayrock and would become a top Trump adviser. Sater claimed they would talk often, with him pitching ideas on a regular basis. By 2005, the duo is trying yet again to build a hotel in Moscow to no avail.
This would all just be face-palm silliness on the Times’s part, a reflection of its editorial disconnect between the culture pages and the business staff, if the story didn’t also glide over the real point of what is going on here. The best protected transactions in the art market are those that pass through the auction houses because those firms do the KYC due diligence that squelch money laundering. Auction houses have compliance staff and are easily monitored by the law enforcement which doesn’t crack down on large private transactions that take place through lawyers or dealers.  The Times admits this when they point out that Jho Low passed KYC diligence before it was revealed that he was involved in the 1MDB transactions. After it was revealed, he is no longer able to access art markets through the auction houses.
“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.
— The United Nations Office on Drugs and Crime estimates the amount of illicit money that is laundered each year to be between “2 - 5% of global GDP, or $800 billion - $2 trillion in current US dollars.” The difficulty of knowing exact figures accounts for the huge margin within estimates. The UN’s estimates specifically cite “Mega-Byte” as an issue, defining the term as “money in the form of symbols on computer screens the can move anywhere in the world with speed and ease.”
Borisovich says London’s Russian oligarchs should not be mistaken for conventional, self-made businessmen. “Their riches come from transactions with the Russian government. They either sold something for a fortune to the state of Russia or they bought something for pennies in some sort of privatisation from the state of Russia. Some of them managed to do both, to buy for pennies and sell for fortunes. Some of them never did any of that and they just worked all their life as government officials and somehow in the process became immensely rich,” he says.

The 2,200 photographs by masters like Alfred Stieglitz, Edward Weston and Edward Steichen — more than could fit into an 18-wheeler — were paid for, court papers say, with some of the $78 million that the authorities say Mr. Rivkin got from defrauding oil companies like Shell, Exxon, and Mobil. Mr. Rivkin, who has not been charged with any crimes, was last thought to be in Spain and had arranged to have the photos shipped there.

The Responsible Art Market, or RAM, is an industry-supported not-for-profit organization which describes itself as ‘”[r]aising awareness of risks faced by the art industry and providing practical guidance on establishing and implementing responsible practices to address those risks.”  On its website, RAM provides both an Art Transaction Due Diligence Toolkit, as well as Guidelines on Combatting Money Laundering and Terrorist Financing (“AML Guidelines”).  The AML Guidelines are similar to the protocols set forth by the Basel Institute, but provide slightly more concrete detail.  They set forth eight basic principles:

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.

Let’s get back to the real estate pilot program that lies at the heart of the Times’s confusion. That federal program, which may or may not be continued, relies upon mortgage title insurance companies to report to authorities the ultimate beneficial owner of any vehicle used to buy or sell very valuable real estate. It does not require the seller to reveal the beneficial owner to the buyer or vice versa.

But his suspicion was not triggered until Bouvier came to Rybolovlev in 2013 and 2014 to shop two paintings, first Salvator Mundi, a recently discovered Leonardo for which he wanted $127 million, and then No. 6 (Violet, Green and Red), a prized Rothko for which he requested $140 million. Rybolovlev told Bouvier that the family trusts would pay for the Rothko only in installments while Bouvier sold other works, including a Modigliani sculpture Rybolovlev had owned since 2012. Bouvier seemed to have trouble finding a buyer for the Modigliani—or "anything!" Rybolovlev says.
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.
He told Swiss publication Le Temps that Rybolovlev owes his company “tens of millions of euros,” while claiming that the oligarch set him up after failing to cough up the cash for Rothko’s No. 6 – Violet, Green, and Red. “[Rybolovlev] couldn’t pay the balance of the last painting he bought from my company, the most beautiful Rothko in the world.” Invited by the buyer to chat, Bouvier “fell into an ambush” as he was detained and handcuffed by eight police officers.
Morland came out to find most of his profits had been lost. His old friends shunned him and the family firm went bust. So for the next thirty years he became a professional yachtsman-smuggler, plying his trade across the Mediterranean, shifting tons of hash, mixing with everyone from Berber tribesmen to gangland heavies, and alternating between periods of sudden wealth and bleak incarceration. In 1980, 1990 and again in 2000, he was caught and jailed for long terms. Now in his early eighties, he lives in “pretty good poverty” and teaches pottery. This is his amazing story.
The theory is that both sides would have something to gain. For Russian oligarchs and mobsters, there’s a need to launder money. “Generally speaking, the patterns of activity that we thought might be suggestive of money laundering were, you know, fast turnover deals and deals where there seemed to have been efforts to disguise the identity of the buyer,” Simpson told the committee in November. Trump, meanwhile, was in need of liquidity, because many banks were unwilling to do business with him after a corporate bankruptcy, and Russian buyers could provide quick infusions of cash. In other cases, the Trump Organization has appeared to have gone out of its way to avoid doing due diligence on business partners.
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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.
The following year, in 2013, an even more high-profile laundering case surfaced when a Jean-Michel Basquiat painting worth $8 million was found in a crate at Kennedy Airport on its way from London. The crate went through customs with a valuation of $100, though it contained Basquiat’s 1982 painting Hannibal (commodities valued under $200 aren’t required to be declared at customs.) The painting had been bought and shipped by Brazilian Banker Edemar cid Ferreira in an elaborate scheme to launder over $50 million that was illegally obtained when Ferreira’s bank, Banco Santos, went bankrupt. In 2004, Ferreira went $1 billion in debt after his financial empire, much of which was built on embezzled funds, collapsed. During his reign over Banco Santos, he had bought 12,000 pieces of art. In 2006, Ferreira was sentenced to 21 years in prison for bank fraud, tax evasion, and money laundering. But before his arrest, $30 million of his art collection was smuggled out of Brazil. The scheme was uncovered when Hannibal was found at JFK. According to court papers, the painting was originally bought for $1 million in 2004 by a Panamanian company called Broadening-Info Enterprises, which was later discovered to be owned by Ferreira’s wife, Márcia.
When addressing the efforts to establish an artwork’s provenance history and authenticity under Guideline 4, the AML Guidelines provide that “[i]t is important to obtain and publish in any catalogue or sales document as much information as possible about the artwork, including any known provenance,” and to “check major databases of stolen and looted art and obtain any relevant and available legal documents, witness declarations, [and] expert opinions[.]” In addition to a physical examination of the artwork and a technical analysis and dating of the materials used, “[d]ocuments helpful in establishing ownership and provenance include invoices, receipts, dated photographs, insurance records, valuations, official records, exhibition catalogues, invoices for restoration work, diaries, dated newspaper articles, original signed and dated letters.”
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