If the BSA is extended to apply to dealers in art and antinquities, FinCEN can expect a robust notice and comment period for the implementing regulations. Further, when proposing such regulations, FinCEN might draw upon some existing AML guidelines for the art trade, including those from two not-for-profit groups — one independent, the other supported by industry. We explore those guidelines in the rest of this post.
I'm not going to bullshit you. Single shipments from Russia were between one and three million, which in the 60s was a lot of money. And these were regular trips-twice a month. It was raining money so I made my base in Beirut. Moneywise Beirut was a free banking market, so you could exchange a million dollars completely open on the square and no one would ask any questions. Of course you had to play the cat and mouse game with Interpol.
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.
The police also arrested Tania Rappo, a charismatic Monaco socialite whom officers interrupted in the middle of a massage. Once a member of Rybolovlev's inner circle, Rappo and her husband Olivier, a retired dentist, had dined with the tycoon and his parents only days before. Now facing charges of money laundering, she would later tell me over dinner how the oligarch had plied her with drink as they chatted in his penthouse.
This painting, known as “Hannibal” after a word scribbled on its surface, was brought into the United States in 2007 as part of a Brazilian embezzler’s elaborate effort to launder money, the authorities say. It was later seized at a Manhattan warehouse by federal investigators who are now preparing to return it to Brazil at the behest of law enforcement officials there.
You need to use friends and trusted business associates and a willing collaborator at your desired destination to create a reliable bridge for turning your sanctioned or dirty money into sweet real estate so it can be liquefied when units are being sold or rented. Ideally, that collaborator needs to be in a bind and be willing to look the other way and not ask questions.
In the shady world of art, private transactions are amongst the most opaque, which is exactly what this case is about. Bouvier, who takes credit in having built Rybolovlev’s collection into “one of the finest in the world,” admits to having worked with the oligarch for ten years, having sold him forty “major works,” reportedly from artists including Picasso, Gauguin, Degas, and even a controversial Da Vinci. Specifically, Rybolovlev’s family trust (which controls his collection) claims Bouvier defrauded them by taking a broker’s commission of 2% while charging an illegal, and hyperbolic, markup, using offshore companies to disguise his interventions.
And then Rybolovlev found out about a New York Times article he had missed from months earlier reporting that the Leonardo he had purchased for $127.5 million had been sold not long before for only $75 million to $80 million. The piece also stated that many experts thought the work had been done by an assistant in Leonardo's studio, not the artist himself.
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We empirically analyze the illicit trade in cultural property and antiques, taking advantage of different reporting incentives between source and destination countries. We generate a measure of illicit trafficking in these goods by comparing imports recorded in United States' customs data and the (purportedly identical) trade recorded by customs authorities in exporting countries. This reporting gap is highly correlated with corruption levels of exporting countries. This correlation is stronger for artifact-rich countries. As a placebo test, we do not observe any such pattern for US imports of toys. We report similar results for four other Western country markets. (JEL F14, K42, Z11, Z13)
On April 17, 2019, the United States Attorney’s Office for the Southern District of Florida (the “Government”) announced its non-prosecution agreement (available here) entered into with a Miami-based gold refinery, Republic Metals Corp. (“RMC”), related to the refinery’s failure to maintain a robust anti-money laundering (“AML”) program. RMC is the second American refinery whose AML program has been identified as deficient by the Government as part of its ongoing probe into gold imports from South American countries such as Peru, Bolivia, and Ecuador (dubbed “Operation Arch Stanton”). The Government’s decision to decline prosecution against RMC stands in stark contrast to its prosecution last year of another refinery, Texas-based Elemetal LLC (“Elemetal”), arising from the same probe.…
These offshore companies can cross borders, invest and transfer cash between each other, and after creating a frustrating enough web of transfers and exchanges, as many of them as vague and anonymous as possible mid-transit, they can invest in money-making ventures. Over time, they build small empires in their target destinations, which for Russians are often Switzerland and the UK, particularly London. But that’s fairly basic. The real pros are a lot sneakier than that, using charitable organizations and nonprofits as their identity shields.
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.
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.
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.