Pointing a finger of suspicion?

When a piece of art sells for a world record fee of $430 million, and your first thought is that this represents a perfect case study for money laundering, you start to think that you may have been in the financial crime compliance profession for too long.

When, having looked in to the matter in more detail you identify that the artwork rose in value from $10,000 in 2005 to $430 million in 2017, you start to doubt your cynicism.

And when the seller just happens to be a Russian billionaire who has previously been charged and arrested for a contract killing of a business associate, but was acquitted when the only living witness recanted their story, well (without inferring that anyone is a criminal) you just know that this is a great case story.

The over-invoicing of artwork to move value is a well-known ‘money’ laundering typology. It is highly successful in that the value of the art is determined between the buyer and seller, and the higher the price, the higher the agent fee! So, all parties are deliriously happy. And of course, sometimes, just sometimes, they hang it on the wall in their homes.

You rather hope that those connected with this sale have completed the enhanced due diligence that one might expect to be performed under the Money Laundering Regulations. They might even file a defence against money laundering, but judging from the latest UK National SAR report for 2017 I doubt it because out of a total of 419,451 SARS that were filed across the regulated sector, 10 (yes, I mean TEN) were filed by auction houses!

What this sale has done is to set the benchmark and raise the financial threshold for the onward sale of all other artwork in the future, thereby raising the ceiling for all future over-invoicing. And so, it goes on.

So, whilst the world looks on with awe and wonder, and those in the room cheer excitedly as they witness this fine achievement, you’ll have to forgive me if I save my applause for another day. I may make one concession however, and make an art purchase of my own. A simple and inexpensive wall-mounted plaque whittled from wood with the words ‘hiding in plain sight’ chiselled upon it would seem appropriate. Who knows what that could be worth tomorrow!