Anonymity and the Art Market
On Sunday, the New York Times published an insightful article, “Has the Art Market Become an Unwitting Partner in Crime?,” examining how anonymity and shell companies have affected the commercial art market.
Mr. Bowley’s and Mr. Rashbaum’s piece provide an overview of how anonymity in art transactions have facilitated scandals including the forgery scheme that took down the Knoedler Gallery, the ongoing dispute between Russian billionaire collector Dmitry E. Rybolovlev and his one-time buyer Yves Bouvier, and the United States’ recent allegations that Malaysian government officials have allegedly embezzled more than $1 billion in public funds (and allegedly spent $130 billion of those laundered funds purchasing artwork at auction).
Of course, anonymity in the art market can provide buyers and sellers of artworks with privacy and security from theft. But as all these recent cases indicate that the same anonymity of offshore accounts and shell companies can also facilitate tax evasion and hiding assets both from the government and occasionally spouses, as was allegedly in the Dmitry Rybolovlev case.
Much of the increased scrutiny on the anonymous purchase and laundering of major artworks was catalyzed by last year’s release of the “Panama Papers,” a collection of more than 11 million files that were leaked by a German newspaper in April 2016. The documents, so-named for the Panamanian law firm that held the documents, exposed how offshore shell companies have been popularly utilized to conceal art ownership and facilitate tax evasion and money laundering. The Times article reiterates some of the same issues I have previously discussed about the use of shell companies to launder artworks when the Panama Papers story first broke.
The Times article provided a few examples of recent efforts to increase transparency such as the Treasury Department’s new initiatives in finance and real estate to more closely monitor the identity of holders of high-net worth property and shell companies. Christie’s has also announced that it will now require agents seeking to sell artworks through the auction house to disclose the owner’s identity. It will be interesting to see whether Sotheby’s and other commercial auction houses will follow Christie’s lead. Such changes could potentially have a significant impact on the use of artworks in international money laundering schemes.
Read the New York Times article here.
