Art Trade and Money Laundering Issues.

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A few months ago two Van Gogh’s were found near Naples,Italy, in a house controlled by the head of a local criminal organization. Genuine interest toward the Dutch artist or art in general? I doubt it as the issue it’s much broader and complicated. However, it gave me the insight to write this article. Criminals have always had a particular attention towards art, even during World War II.

Besides the best, worldwide known pieces, how many of us can truly understand the actual value of a piece of art?

Personally, I would not be able to recognize an authentic first, unique, edition nor a piece of Asian art and I am quite sure I am not alone. Paintings, furnitures and books represent a safe way to store illicitly gained money given the wide black market that sources these high end goods. It has been calculated, in fact, that the annual value of art’s black market is around 5 billion Euros and the demand is constantly increasing; as we can read on daily basis on newspapers, therefore, museums, galleries and private collections are often targeted by thieves.

Who is behind this traffic? The very wealthy, criminal, and terrorists. Despite what they may make us think, they use the art for self-financing purposes.

This Video shows differently, but it should be taken for what it really is, propaganda. In fact, they destroyed masterpieces without an economic value as they could not be traded (the Buddha’s and also ancient installations).

It has been widely acknowledged, vice versa, that art dealing is one of the biggest source of incomes of terrorist organizations. As AML practitioner, I witness the financial sector’s need to complete ad hoc procedures such as due diligence, enhanced due diligence, KYC, but what about art? This trend is worrisome as we have not reached yet the same level of awareness we reached in the financial sector or other high profile transactions (i.e. diamonds).I fully appreciate – for the reasons exposed at the very beginning – that tracking the black market is difficult and challenging, however, a synergy with the disposition already in place for the financial sector may be extremely beneficial as, for the time being, the art fell behind.

At least in Europe, because of the 4th AML Directive, transactions for more than 10,000€ will be soon subject to anti money laundering checks; better be ahead of the curve.

Insurance companies, museums and private collectors must exercise accurate due diligence in their respective fields but, more importantly, the matter needs to be properly addressed at international political level (as per usual, I would add).

Using specialized task forces or police bodies on permanent basis like in Italy or in the USA (FBI Art Theft Program) might be a start. From one side, it is true that the private sector has to be fully compliant with applicable laws, however it is always up to the public sector enforcing  those rules. This is a case where corruption may  also play a major role because these goods have to go through customs and tax inspections. Just to demonstrate that wrongdoers understood this long time ago, I will leave you the example of the famous paint ‘Natività’ (Nativity) made by Caravaggio

A true masterpiece that was stolen from a Sicilian church, allegedly, by the Mafia, in 1969, still in the FBI’s top 10 art crimes and disappeared ever since.

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Michele La Neve

White Collar Crime Attorney at Whitecotton Law Dedicated to Helping Clients Overcome Unforeseen Business Risks.