Initially, the oligarchs used intelligence officers as their personal security guards but Vladimir Putin flipped the system when he came to power in 2000, so that the intelligence services now controlled the oligarchs. The men who had made their fortunes through the privatisation of Russia’s infrastructure and natural resources now faced a choice – to share their cash with Putin’s circle or face the consequences.
Bonhams and Christie’s say that they had done research on their pieces, but were hampered by Italian authorities’ refusal to make the photographic database available to auction houses: “While we have a careful due diligence process in all other respects we have no way, without the co-operation of the Carabinieri, of checking this particular database. This case illustrates why that co-operation would be helpful,” said a spokesperson for Christie’s. As for the Roman statue, it was put on display in a New York art fair last year – but failed to sell. The US authorities are hoping to return it to Italy.
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.
“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.”
The bank bought an $850 million stake in a Ukrainian steel mill through a mystery middleman, then sold it to Russian-Canadian investor Alexander Shaider. This investor who would then fund Trump International Hotel and Tower in Toronto, and pay the consulting and licensing fees to label it a Trump property and bring it under The Donald’s umbrella in the public eye. In fact, this is how Trump’s name ended up on so many buildings. It’s licensed while its true owners are out of sight, and out of mind.
Philip Byler, Broadening’s lawyer in New York, said that the inaccurate invoices were merely a shortsighted attempt by the art dealer that Broadening hired to save importation fees. “It was not done with the intention of smuggling,” he said. He also challenged the Brazilian authorities’ claim, saying that “Hannibal” was legally purchased from a company owned by Mr. Ferreira’s wife.
Though relations between the Republican and Democratic members of the intelligence committee remain contentious, they seem to have improved since Chairman Devin Nunes stepped aside from the investigation amidst a bizarre escapade, in which the White House appeared to be feeding Nunes claims of ethical lapses by the Obama administration in handling intelligence information.
Of course, certain countries already impose AML regulations on the art world. The European Union Commission issued its 5th Anti-Money Laundering Directive in June 2018, which must be implemented by Member States by January 2020, and which in part expands its coverage of “obliged entities” to persons trading in art, acting as intermediaries in the trade of art, or storing art in freeports, if the value of the transaction or a group of linked transactions equals €10,000 or more. In the United States, although the BSA already applies to dealers in precious metals, stones and jewels, and thereby requires them to file Suspicious Activity Reports and comply with other AML obligations, no such rules currently apply to U.S. dealers in art.
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.
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I'm trying to think of the creative way to do this. I mean, as you may know, you know, most of these transactions are cleared through New York. And the other sort of central place for information is SWIFT in Brussels. But I would go for the clearing banks in New York that cleared the transactions, you know. And there's—again, it's these sort of intermediary entities that have no real interest in protecting the information, and all you have to do is ask for it and they just sort of produced by rote. So we've done a lot of money laundering investigations where we go to the trust companies and the clearing entities. And so, you know, all dollar transactions are generally cleared through New York. So, you know, the main thing you have to do is identify the banks that were used.
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.
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But the partisan tensions bubbled over again Friday, with a skirmish over a report apparently produced by a splinter faction of Republican members of the House Intelligence Committee led by Nunes. The GOP majority voted Thursday night to share the report with colleagues, but not to release it to the general public. By Friday morning, however, Republican members of Congress were demanding the memo be made public—with their calls being amplified by Russian-linked Twitter accounts.
Briefly: On New Year's Eve 2014, Rybolovlev found himself at the Eden Rock St. Bart's eating with Sandy Heller, a New York art consultant who advises many hedge fund managers. Somewhat obliquely Heller said, "It looks like you bought the Modigliani [we sold]." He was referring to Reclining Nude with Blue Cushion, one of the artist's most famous canvases, painted in 1917. The painting had belonged to Steven A. Cohen, the founder of SAC Capital Advisors and also one of the richest men in the world.
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Like most laundering cases involving art in the United States, this one was uncovered when the work was illegally transported into the country. In 2004 Mr. Ferreira’s financial empire, built partly on embezzled funds, collapsed, leaving $1 billion in debts. A court in São Paulo sentenced him in 2006 to 21 years in prison for bank fraud, tax evasion and money laundering, a conviction he is appealing. Before his arrest, however, more than $30 million of art owned by Mr. Ferreira and his wife, Márcia, was smuggled out of Brazil, Judge De Sanctis said.
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.

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.
He needed to be bailed out by his father in the 1970s, and then again in the 1980s to stave off bankruptcy. He ended up bankrupting multiple companies anyway and trying to hold banks hostage to forgive many of his debts after the Taj Mahal and Plaza Hotel were in dire straits. In 1995, his one year losses exceeded $916 million. Many of his businesses crashed and burned, and according to his ghost writer for The Art of the Deal, much of his business savvy was little more than bluster.
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The potential role of high-end art and antiquities in money laundering schemes has attracted increasing attention over the last several years, particularly as the prices for such objects steadily rise and a tightening global enforcement and regulatory net has rendered other possible avenues for money laundering increasingly less attractive. The effort to subject U.S. dealers in art and antiquities to Anti-Money-Laundering (“AML”) obligations recently has gained new life.  As we blogged, the House Financial Services Committee just released three proposed bills to codify many of the reform ideas that have been swirling around the Bank Secretary Act (“BSA”) and AML and Combating the Financing of Terrorism (“CFT”) laws.  One of the bills — entitled as the “To make reforms to the Federal Bank Secrecy Act and anti-money laundering laws, and for other purposes” —  catalogues various detailed provisions seeking to reform the BSA and AML laws.  Nestled admist all of the other, generally higher-profile proposals (such as the creation of a BSA whistleblower program), one short section of this bill simply expands the list of defined “financial institutions” covered by the BSA to include “dealers in art or antiquities,” and then states that the Secretary of the Treasury shall issue implementing regulations within 180 days of the bill’s enactment.
Rybolovlev says he did not know what was going to happen to Rappo or Bouvier. "I didn't know the police would arrest them then," he says in answer to their accusations of a sting at Rybolovlev's apartment. The police had asked him to act normal, he claims, but "I needed vodka to get through it." Rappo, he says, was her usual, effervescent self, chattering about the beauty of the Rothko and pressuring Rybolovlev to buy it.
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.

He soon joined Ekaterina and Elena in Geneva. However, in their new home, despite their vast wealth, the Rybolovlevs were isolated. Although Elena eventually learned to speak fluent French, her husband "was always distracted by business. I couldn't clear my mind," he says. One of the first friends they made was Tania Rappo, the wife of their dentist, who happened to mention that his wife spoke Russian. (Rappo comes from Bulgaria, where the language is spoken by about a third of the population.)
Law enforcement officials in the United States and abroad say “Hannibal” is just one of thousands of valuable artworks being used by criminals to hide illicit profits and illegally transfer assets around the globe. As other traditional money-laundering techniques have come under closer scrutiny, smugglers, drug traffickers, arms dealers and the like have increasingly turned to the famously opaque art market, officials say.

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.

Secrecy has long been central to the art world. Anonymity protects privacy, adds mystique and cuts the taint of crass commerce from such transactions. But some experts are now saying this sort of discretion — one founded in a simpler time, when only a few wealthy collectors took part in the art market — is not only quaint but also reckless when art is traded like a commodity and increasingly suspected in money laundering.
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The Salisbury attack has reopened questions about more than a dozen suspicious deaths of Russians in London in recent years, many of them linked to organised crime. Even before the attack on the Skripals, the relationship between Russian money in London and international crime came under renewed attention with the success of the BBC television series McMafia.
where Rybolovlev was informed that the Kremlin was reopening a potentially bankrupting investigation into the collapse of a mine belonging to Uralkali. Understanding the government's interest in his company and that his days of owning it were numbered, Rybolovlev cashed out, leaving his estimated net worth somewhere between $8 billion and $13 billion. He then focused on trolling the world for other investments. In 2010 he moved to Monaco, his trusts buying La Belle Epoque. His trusts also bought a majority stake in the AS Monaco soccer team in 2011. And in 2012 a broker recommended by Rappo sold his trusts the penthouse at 15 Central Park West. Rybolovlev says that Rappo called him as the deal was closing. "I've been offered a commission of $100,000," she told him. "Would you mind if I accepted?"

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).
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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.
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