How art launders money always fascinates me
May 13, 2013 7:55 AM   Subscribe


 
To be fair, the fake mustache they glued on the painting was a dead giveaway.
posted by Strange Interlude at 8:03 AM on May 13, 2013




Easier to move around than bottles of Tide.
posted by Jahaza at 8:09 AM on May 13, 2013


The Age of Transparency is on its way.
posted by artof.mulata at 8:12 AM on May 13, 2013


I just gave a talk about this problem in Canada in March -- art is a huge hidden currency that gets exploited one way or another -- it's easy to smuggle, steal, and hide. Thanks for the link...
posted by Alexandra Kitty at 8:14 AM on May 13, 2013


"But to dealers and their clients, secrecy is a crucial element of the art market’s mystique and practice. The Art Dealers Association of America dismissed the idea that using art to launder money was even a problem. “The issue is not an industrywide problem and really does not pertain to us,” said Lily Mitchem Pearsall, the association’s spokeswoman."

...and she honestly expects us to just believe this and go away? The 'mystique and practice' of the high end art market that shifts objects of the cultural heritage of mankind around like they were Pokémon cards for rich people is something that would be fantastic to crush just on principle. However, to suggest that this bullshit isn’t currently being used to support horrific shit despite all available evidence is an insult to the intelligence of her audience.
posted by Blasdelb at 8:20 AM on May 13, 2013 [7 favorites]


My kid could smuggle that.
posted by maudlin at 8:23 AM on May 13, 2013 [18 favorites]


IANAMoney Laundrerer, but I thought the whole deal is to produce some legitimate-looking income by publicly selling an asset to a fake buyer holding your dirty money, and I can't see how smuggling the painting helps with that.

As far as I can tell, the painting was disguised to get it through customs on the cheap. This looks to me like it accomplishes the exact opposite: Instead of cleaning up dirty money by exchanging it for a clean painting, they have tainted the painting by bringing it in the country illegally, making it impossible (?) to sell legitimately. You would expect TFA to explain this kind of thing, but it just throws around large dollar figures and makes all these frustratingly vague references to secrecy in the art market.
posted by Dr Dracator at 8:23 AM on May 13, 2013 [2 favorites]


IANAMoney Laundrerer, but I thought the whole deal is to produce some legitimate-looking income by publicly selling an asset to a fake buyer holding your dirty money, and I can't see how smuggling the painting helps with that.

That's how I understand it as well. From the article it appears that he was trying to hide his valuable art before the Brazilian government seized everything.
posted by Benway at 8:33 AM on May 13, 2013


Europe is more on top of this than other countries with special laws and departments for art crime. In the US art theft is all the rage among thieves because it's treated as any other property crime and thus limited penalties and high return, unlike other types of crime like bank holdups which have more severe penalties. Art theft is mostly from people's homes (and local museums), mostly lower value stuff that doesn't make the news. Great book on the subject is Priceless: How I Went Undercover to Rescue the World's Stolen Treasures by a former FBI agent who investigated art theft, though in the US there really isn't a dedicated department focused on art, they treat it like any other theft, no dedicated art experts.
posted by stbalbach at 8:35 AM on May 13, 2013 [1 favorite]


The way that art (and "art," I guess), commerce, and import customs intersect is often weird and fascinating. I recall reading a case where a Dan Flavin work was being imported in to a Western European country (I want to say Germany). The country (or at least, it's court system) refused to acknowledge that it was "art," and therefore eligible for a massively reduced import duty, and instead wanted to assess whatever the standard percentage would be for a multi-million dollar import. But of course, by refusing to acknowledge that it was "art," they were basically saying that it was just a pile of lightbulbs, which shouldn't be worth more than a few bucks, which means an import duty of mere pennies, but of course, that won't do because then the country loses out on revenue...
posted by saladin at 8:37 AM on May 13, 2013 [5 favorites]


seems like wine would work even better. just slap on a new label ... i suppose various posts have different restrictions on shipping alcohol ...

or juiceboxes
posted by mrgrimm at 8:42 AM on May 13, 2013 [1 favorite]


The country (or at least, it's court system) refused to acknowledge that it was "art," and therefore eligible for a massively reduced import duty, and instead wanted to assess whatever the standard percentage would be for a multi-million dollar import.

A similar thing happened for Brancusi's Bird in Space:

"In 1926-27, Bird in Space was the cause of a court battle due to the piece being taxed by U.S. Customs. In October 1926 Bird in Space, along with 19 other Brâncuși sculptures, arrived in New York harbor aboard the steamship Paris.[5] While works of art are not subject to custom duties, the customs officials refused to believe that the tall, thin piece of polished bronze was art and so imposed the tariff for manufactured metal objects, 40% of the sale price or about $230[6] (over $2800 in 2010 U.S. dollars). Marcel Duchamp (who accompanied the sculptures from Europe), American photographer Edward Steichen (who was to take possession of Bird in Space after exhibition), and Brâncuși himself were indignant; the sculptures were set to appear at the Brummer Gallery in New York City and then the Arts Club in Chicago. Under pressure from the press and artists, U.S. customs agreed to rethink their classification of the items, but until then released the sculptures on bond under "Kitchen Utensils and Hospital Supplies." However, customs appraiser F. J. H. Kracke eventually confirmed the initial classification of items and said that they were subject to duty. Kracke told the New York Evening Post that "several men, high in the art world were asked to express their opinions for the Government.... One of them told us, 'If that's art, hereafter I'm a bricklayer.' Another said, 'Dots and dashes are as artistic as Brâncuși's work.' In general, it was their opinion that Brâncuși left too much to the imagination." "
posted by Tsuga at 8:53 AM on May 13, 2013 [1 favorite]


saladin: I recall reading a case where a Dan Flavin....

It was London 2011 reversing a 2009 case which allowed Bill Viola and Flavin's work to be classified as art. Now they are classified as light fixtures and projectors, not art..
UK galleries and auction houses will have to pay full VAT (value added tax, which goes up to 20% next year) and customs dues on video and light works, when they are imported from outside the EU. The decision is binding on all member states.
posted by snaparapans at 8:56 AM on May 13, 2013


Ah, indeed it was, thanks snaparapans.
posted by saladin at 8:58 AM on May 13, 2013


stbalbach - The US has a dedicated Art Crime team, started by Robert K. Wittman, the author of the book you linked to.

FBI Art Crime Team.

I've heard some of their members give talks at various conferences. One of my Law school professors works pretty closely with them as well, so they'd visit our school once a year. Always interesting!
posted by Arbac at 9:20 AM on May 13, 2013 [1 favorite]


I find this strangely fitting. A friend of my mother's, who spent some time in the NY art world during Basquiat's heyday, told me that a lot of the art dealers used the flow of drugs to "encourage" artists to keep producing. So this is just kind of closing the loop.
posted by GenjiandProust at 9:23 AM on May 13, 2013 [1 favorite]


What a load... Law enforcement officials in the United States and abroad say “Hannibal” is just one of thousands of valuable artworks....

Yeah, and the thousands of terrorists planning to destroy the way we live are also lurking in secret cells across America. Yawn..

Law enforcement really needs to be kept in check. The percentage of art bought by value or quantity the percentage of art trade tainted by money laundering is statistically insignificant, compared to either the dollar amount or volume of art traded internationally.

What is more interesting imo, are stolen artworks that are too famous to ever be sold but are stolen by mobsters and kept in secret and used as a commodity to back financial schemes, like a gold standard, but using art instead of gold.

It could be that the Gardner Heist fit that kind of scenario.
posted by snaparapans at 9:25 AM on May 13, 2013 [2 favorites]


There was a thread in March about the Gardner Heist that included a debate about whether criminals ever actually used stolen paintings to launder money, with some folks highly skeptical. The Basquiat in this case wasn't stolen, which changes the dynamic significantly, but it's still interesting to at least see confirmation of "criminals moving artworks as a money-laundering scheme."
posted by mediareport at 10:04 AM on May 13, 2013 [1 favorite]


"Law enforcement really needs to be kept in check. The percentage of art bought by value or quantity the percentage of art trade tainted by money laundering is statistically insignificant, compared to either the dollar amount or volume of art traded internationally."

You say statistically insignificant like you've just done some hypothesis testing to demonstrate a p-value higher than some justifiable alpha, but fuck if there isn't even any remotely relevant data to test. You can't even say anything really meaningful about the total sample size of art being traded in value or number of pieces, much less the amount of art being traded in shady ways, much less the relative sizes of these populations. With how opaque the accounting standardly is in this world, the only real window we have into it is through people getting caught doing shady stupid shit by accident and people being caught for other shady shit. I don't know about you, but I'm keen to find out just how bad its gotten – and presumably always been - particularly when doing so involves only standard, boring, and inexcusably easy reporting practices that have already been worked out in other markets.
posted by Blasdelb at 10:17 AM on May 13, 2013 [2 favorites]


You say statistically insignificant like you've just done some hypothesis testing...

Well I am not a statistician, but I do spend quite a bit of time in the art world. Based on my experience (30 years..or so) I have been aware of a tremendous amount of art trading. None of it
was done for money laundering. Supposedly the annual art revenue is $60 billion dollars 2011, and $55 billion 2012.

I am as fascinated as anyone about criminal schemes revolving around buying and selling art, but my take on the linked NYT article is that feeds off angst against the 1% implying that the lack of regulation in the art market draws in a high percentage of criminal activity.

I have not seen it. But, it is fun for many who have never been to a gallery, bought or sold art, or even particularly care about art, to believe that there is a massive conspiracy of criminal activity by the 1%, going on behind those closed doors. My bet would be on Wall Street if you are looking for statistical
relevance of crime... Oh, but wait, I forgot.. the bankers write the laws.
posted by snaparapans at 10:41 AM on May 13, 2013 [2 favorites]


Contents: art supplies. Pre-assembled.
posted by blue_beetle at 10:51 AM on May 13, 2013 [4 favorites]


(Potentially) true story, brah.

Back in the 1990s when I first got into shipping and oil (long story about how I got out and came back), I was an analyst: I set credit ratings for oil trading companies.

I was out with one of these companies in London where excessive drinking, at the time was...mandatory.

One particularly sodden night, one of my clients, owed about USD 2m from a client with no intention of paying, confessed they'd had his Belgian home, in which they'd dined, burgled and its art stolen.

They are, to my knowledge, no longer owed USD 2m.
posted by digitalprimate at 11:18 AM on May 13, 2013 [1 favorite]


Arbac: "stbalbach - The US has a dedicated Art Crime team, started by Robert K. Wittman, the author of the book you linked to.

FBI Art Crime Team.

I've heard some of their members give talks at various conferences. One of my Law school professors works pretty closely with them as well, so they'd visit our school once a year. Always interesting!
"

OK somehow I got that info wrong since in the book he talks about it but maybe he was writing of the history pre-establishment of the ACT in 2004. Anyway, great book and fascinating subject.
posted by stbalbach at 12:13 PM on May 13, 2013


The Art Newspaper:
A sense of perspective is in order, says the former federal agent Robert Wittman, who now runs a private consultancy. “Is art used to launder money? Sure it is. But the foundations of the art world are based on real collectors buying real art. Money laundering is part of the criminal underworld—it’s on the fringes.” Robert Storr, the dean of the Yale University School of Art, agrees. He says that, although there is opportunity, “not everybody becomes a crook. Suspecting the entire art world of massive fraud and larceny, as politicians are prone to do, is like suspecting every waiter at a five-star restaurant of stealing champagne and caviar or hogging tips.”....

A spokesman for Christie’s says: “We have strict policies and procedures in place with regards [to] payments, including a global anti-money laundering programme.” According to its catalogues, Christie’s has a $7,500 limit on cash payments (Sotheby’s limit is $10,000 or the local currency equivalent).
posted by snaparapans at 2:35 PM on May 16, 2013


I am sure that laundering money through financial instruments is muuuuuch more common and much less complex laundering money through buying and selling fine art.

U.S. accuses currency exchange of laundering $6 billion
The indictment unsealed on Tuesday said Liberty Reserve had more than a million users worldwide, including at least 200,000 in the United States, and virtually all of its business was related to suspected criminal activity.
posted by snaparapans at 7:18 AM on May 29, 2013


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