Middlemen who shield the identities of art collectors, dealers and sellers. A dearth of regulations to ensure criminals don’t use the art world to legitimize their ill-gotten proceeds. Purchases of art through shell companies that lead back to sanctioned Russian oligarchs via fictitious, off-shore companies.
All of this sounds like a movie, right?
The advent of recent anti-money laundering (AML) legislation, not to mention Know Your Customer (KYC) regulations, in Europe and the United States has made it more difficult — though not impossible — to hide the true identities of parties involved in art transactions. The new developments also mean that storylines involving art and money laundering were somewhat easier to dramatize believably a decade ago or more.
An Art Auctioneer Gets Tricked
Mickey Blue Eyes, a 1999 comedic film in which Hugh Grant stars as a British expat Michael Felgate, who runs a successful auction house dealing in rare and valuable art. Michael pursues and becomes smittens with Gina (portrayed by Jeanne Tripplehorn), and he eventually proposes. Gina turns him down, citing her family — and her well-founded fear that they will corrupt him — as the reason. Undaunted, Michael tracks down Gina’s father, Frank (played by James Caan), who happens to be a mob kingpin.
Frank takes a liking to his daughter’s suitor and ends up asking him for a few favors. Before long, Michael finds that he has inadvertently laundered money for an organized crime ring (via a questionable painting of Jesus and his disciples as gun-toting gangsters) and has to pass himself off as a gangster named “Mickey Blue Eyes.”
While hilarity inevitably ensues, the film depicts a simplified version of how artworks up for auction — with highly subjective valuation attached — can provide a vehicle for laundering funds with a questionable provenance. Of course, there are no discernible anti-money laundering (AML) or Know Your Customer (KYC) practices in place to help avoid such entanglements.
Failed Efforts to Fence a Stolen Painting
In the basic-cable television series, White Collar, a con man, artist, and forger named Neal Caffrey (portrayed by Matt Bomer) collaborates with FBI Special Agent Peter Burke (played by Tim DeKay) in a deal to stay out of prison by tracking down white-collar criminals.
The fifth episode of White Collar, titled “The Portrait,” centers around a stolen $2 million painting by a fictitious, Hungarian, post-Impressionist artist named Haustenberg. Neal and Peter devise a sting operation to catch the thief, a loan shark with a propensity for violence, who has been trying to sell the painting — in the very city in which he stole it, nonetheless.
The plot includes twists involving a museum’s questionable claim to the painting, an illegitimate child, and a forgery — yet more reasons for art dealers and collectors to understand the due diligence that can help protect them from legal and reputational issues.
The TV series features episode plot lines that also venture into the smuggling of art and antiquities from Iraq and Egypt, rare book thefts, and a museum art heist, as well as a stolen-goods marketplace connected to an art dealer — and yet it’s not a comedy. (Trafficking in black-market antiquities is one way terrorist groups move funds, too.)
Of course, smart implementation of ArtTech, which is the leveraging of new digital technologies to digitize the art world, could help avoid many such situations and reduce their ensuing risks.
A Real-Life Painting Is (Almost) Smuggled
While technically not a film about money laundering in the art industry, the 2019 film, The Laundromat, directed by Steven Soderbergh, takes its plotlines directly from the Panama Papers, a leak of 11.5 million documents from a law firm that specialized in creating fictitious entities used by individuals around the globe to hide — and move — assets without detection. In real life, these moves have included the obscured purchases and sales of high-end artworks by the likes of Modigliani, Van Gogh, Rembrandt, Chagall, Matisse, Basquiat, and Warhol.
In one notable case, former Brazilian banker Edemar Cid Ferreira attempted to smuggle Jean-Michel Basquiat’s 1981 painting, Hannibal, from Brazil into the United States via the Netherlands with a fake shipping invoice declaring a valuation of $100, rather than at its $8 million appraisal. Ferreira was later convicted of money laundering and other crimes. New U.S. legislation aimed at curbing money laundering will mean that the art industry will come under increasing pressure in the future.
A Film Producer Makes Headlines
Finally, honorable mention goes to the 2013 Martin Scorcese blockbuster, The Wolf of Wall Street, starring Leonardo DiCaprio. The film, which earned an Academy Award nomination for Best Picture and nabbed a Best Actor prize for DiCaprio, depicts the true story of boiler-room broker Jordan Belfort’s shady successes and his ultimate fall for numerous violations of U.S. securities laws. Yet in a real-life scandal that could inspire its own motion picture, Riza Aziz, the producer who backed the film himself was accused of embezzling $248 million from Malaysia’s 1MDB fund and linked to the disappearance of as much as $4.5 billion from the investment vehicle. Aziz, who is a stepson of former Malaysian Prime Minister Najib Razak, escaped prosecution after he agreed to return more than $107 million assets, or less than half of the funds at issue.
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Bruno J. Navarro is a journalist whose work on business, technology, education, and fashion has appeared in NBC News, The Associated Press, CNBC, Women’s Wear Daily, Nylon, and The Arizona Republic. He is based in New Jersey.