Art Businesses should also consider the form of the transaction, such as whether the transaction is taking place through intermediaries, face to face, entirely via the Internet, over the phone, or by any other similar non face to face means. In some circumstances, depending on the nature, value and/or geographic location of the transaction, enhanced due diligence may be appropriate.
DMITRY RYBOLOVLEV SELDOM gives interviews. The 49-year-old Russian—one of the richest people in the world, with a net worth estimated at $8.8 billion—is notoriously private, and also notoriously security-conscious, perhaps because back in the 1990s, while building up Uralkali, one of the world's largest fertilizer companies, he survived a year in a Russian prison and several murder attempts.
Over the years Bouvier has shifted his core business from art transportation to building and operating vast, secretive high-tech fortresses used for storing not just artworks but cars, wine, coins, and furniture. Such repositories, known as free ports, have existed for centuries, but until quite recently their primary purpose was to hold raw materials in transit—a shipment of soybeans, say. They were found primarily in transit zones, such as airports and canals, and they usually enjoyed one of the benefits of existence at the jurisdictional margins: tax and duty freedom.
“I've felt all along in the Russia investigation that the most important issues were those that had the potential of exerting a continuing influence over the administration and over U.S. policy,” Representative Adam Schiff of California, the ranking Democrat on the House Intelligence Committee, told me Friday. “And if the Russians were laundering money through the Trump Organization, the Russians would know it, the president would know it, and that could be very powerful leverage.”
But while Simpson saw disturbing patterns, he was unable to nail anything down, because he couldn’t get the relevant records from banks and other financial institutions. Schiff posed an interesting question: Simpson didn’t have subpoena power, but the committee did. Who should it subpoena if it wanted to learn more? Simpson laid out a roadmap for Schiff:
Other valuable customers for the auction houses and dealers were Malaysian businessmen who, beginning in 2013, bought more than $200 million in art, usually operating as the Tanore Finance Corporation, including eight works at Christie’s. The United States government contends in a civil complaint that the art was purchased with money that had been embezzled from Malaysian government accounts and that the ultimate beneficiary was Jho Low, one of the businessmen. Mr. Low, who has denied any wrongdoing, has not been criminally charged.
A major player in the art world, Bouvier is well-known for operating free ports in Geneva, Luxembourg, and Singapore. Through his Natural Le Coultre, they are the largest art operator in Geneva with a 22,000 square meter state-of-the-art facility that offers art storage, transport, and favorable tax conditions, and sometimes no taxes at all. At Geneva, reports indicate warehouses hold $100 billion worth of art essentially beyond the taxman's eyes. Bouvier was also behind €150 million arts-park named R4 in Paris, and was also courting the Chinese government to set up a freeport in Beijing.
Bouvier, of course, denies all accusations, claiming to have found out about the complaint as he was arrested. An art market insider explained to Forbes that it’s common for intermediaries to take their cut directly from the selling price, which in most cases isn’t illegal, unless certain conditions are violated. Forbes reached out to three different lawyers connected with Bouvier (David Bitton, Luc Brossollet, and Charles Lecuyer) but wasn’t able to get a response.
Morland was heir to a Quaker dynasty that made a fortune turning sheepskins into coats, and lived a gilded youth: his father was a renowned physician and his mother was a key figure in the modern art world, friend of George Orwell and Henry Moore. At 6ft 3in tall, good looking and well connected, Morland skied for England, had a beautiful wife and children, a des-res in south-west London, a farmhouse in Malta and the world at his feet.
The wealthy figured this out in a big way back in the 1980s, giving rise to ‘art stars’ valued in the millions. And with the increasing popularity and geographical scope of biennials and art fairs in the 1990s, rich people all over the world now have access to seas of multi-million dollar investments that can be rolled up and stored just about anywhere.
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.
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