Buying and selling art has long stood as a pastime for the elite – and in the case of multi-million dollar transactions, one could argue it’s a sport of its own.
And it’s certainly competitive. Even the most prestigious auctions are merely a race measured in time, taste, and resources; and we can imagine that someone, somewhere, is very proud that his own medieval manuscript is “more medieval” than the whole collection of manuscripts his great-aunt Catherine dared try to pass down to him. But status and symbolism truly are just the surface of this exchange – the whole reality of the arts and antiquities trade includes a dangerous game of being unseen.
In other words, there’s a whole separate race going on behind the Velvet Curtain: one which pits a buyer/seller tag team against international law.
With any free market comes the assumption that there’s some shady business going on. Circulating stolen objects, misrepresenting imports, and laundering tons of money are all characteristic to the arts and antiquities exchange – and you better believe there is especially a lot of money laundering going on. In a lucrative industry with such high-value items, there’s almost no easier opportunity to disguise the transfer of thousands or millions of dollars, no matter domestic or international. When we call this phenomenon the Velvet Curtain, it means exactly what it sounds like it means: a “patronage to the arts” is sometimes just another way for the super-rich to delegate their assets off the grid and gain access to a multi-million dollar economy in the same turn. It’s a win-win.
So who are the perpetrators? Well, it comes as no surprise that these are some of the key identifiers for those most likely to pervert the trade:
- Money. Most obviously, this is a trade which requires its participants to buy their way in – and it’s a heavy price.
- Power (inherently or by association). These are people (more likely, corporations) that divvy some of their vast wealth in “small” parts that still amount to multi-million dollar transactions. But even before that, they know the law well enough to have developed a game plan to obfuscate their resources in the arts exchange. And, when they want to come out of the shadows and make a donation, there’s a fun tax write-off at the end.
- Connections. There’s a lot of dirty money going around, and too many people treat the art market as their piggy bank totally unchecked, because they are either in the art world as a curator, scholar, donor – or because they know someone of the sorts.
- Something else to hide. Crime attracts crime – it only makes sense that many of those abusing the art market to obscure huge sums of money could also be involved with drugs, trafficking, and other nefarious trades which would earn those sums of money to begin with.
- Terrorists. Where there is war, there is looting – and plenty of smuggling and resale is organized at the hands of terrorist groups. For example, the occupation of Syria by ISIS has seen a particularly large volume of artifacts lost in the underground exchange.
So what does current legislation do? In the United States, not much.
Homeland Security released a report on July 29, which makes an example of two Russian oligarchs – Arkady and Boris Rotenberg – who routinely abuse the anonymity of the United States’ art market. One crucial piece of information right off the bat: the Rotenbergs are two lifelong associates of Vladimir Putin. So naturally, following the annexation of Crimea, the Rotenberg families were mentioned by name in U.S. sanctions against Russia. However, our art market unintentionally permits the likes of the Rotenbergs to evade sanctions in place. Buyers and/or sellers are welcome to employ agents to participate in transactions on their behalf – thus, the identity of one or both parties is totally obscured.
The following excerpts from the Senate report tell you everything you need to know:
The art market is the largest legal, unregulated market in the United States. The art industry is not subject to the Bank Secrecy Act (BSA) and is not required under U.S. law to maintain anti-money laundering and anti-terrorism financing controls for transactions.
And from Senator Robert Portman himself:
“This bipartisan report demonstrates that Russian oligarchs like the Rotenbergs have used the secrecy of the art industry to evade U.S. sanctions … It is shocking that U.S. banking regulations don’t currently apply to multi-million dollar art transactions, and we cannot let that continue. The art industry currently operates under a veil of secrecy allowing art advisors to represent both sellers and buyers masking the identities of both parties, and as we found, the source of the funds. This creates an environment ripe for laundering money and evading sanctions.“
Of course certain dimensions of the art world would do well with added regulation; but it is way past time to put policies in place to discourage money laundering in the trade. We must be stewards not only to the objects, but also to the contexts in which they are exchanged.
We will certainly continue to follow the developments of this story, and we hope one day to report legislation is underway to penalize such blatant abuse of the arts and antiquities market.
Read the full Senate report regarding the Rotenbergs and calls for regulation here.
Present Preservation 