Using Art to launder Money

It is often said that Art is a business custom-made for money laundering, with million-dollar sales conducted in secrecy and with virtually no oversight. Transactions are often between a seller listed as ‘private collection’ and the buyer, listed as ‘private collection as well. In any other business, no one would be able to get away with this. As a result there are no hard statistics on the amount of laundered money invested in art. Precisely because of that, can you imagine the amount of money that has been laundered this way? 

Typically, dirty money is laundered through the earnings of a legitimate business e.g. a club, restaurant , retail business. When this money come out the other end, they appear as business profit & look clean & legit. These people don't even mind paying a little tax...lol... 

Most of these industries have checks. Their accounts needs to be audited, invoices are needed & can be checked easily for fraud.  The art market lacks these safeguards. A canvas can be easily rolled up , moved round the world or stash in a closet. Prices can be adjusted easily, by millions of dollars; and the names of buyers and sellers tend to be guarded zealously, leaving authorities clueless on who was involved, where the money came from and whether the price was suspicious. 

But to dealers and their clients, secrecy is a crucial element of the art market’s mystique and practice. Those in the industry even dismissed the idea that using art to launder money was even a problem.  

However governments from many countries are not sitting still. For instance, the European Commission recently passed rules requiring galleries to report anyone who pays for a work with more than 7,500 euros in cash and to file suspicious-transaction reports.  

As of now in New York, victims of the fraud and money laundering scams of the disbarred lawyer M Dreier are still in court fighting over art he bought with some of the $700 million stolen from hedge funds and investors. At the moment 28 works by artists like Matisse, Warhol, Rothko and Damien Hirst are being stored by the federal government.