Why do people buy huge canvases with a few dots on from an arts unheard of for millions? I know it’s commonly used to launder money. Can someone explain how the process works?
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The person looking to laundry money finds an artist friend to buy a painting from them. Then that artist can sell their paintings for a ridiculous amount of money because art is subjective and there is no set value on creativity. The newly acquired art is then donated to a museum where they can write that off on their taxes.
Udi Sheleg’s gallery has a lot of Russian customers who pay cash. They will likely then sell the art on which will clean their money and the money of the buyer.
Same concept as car wash, nail salon, hair salon, anything that ends in salon or spa or massage parlor, laundromat, or similar legitimate business. Any service provided by a business that will make you clean. Or will clean your possessions. Can also clean your money. Many comments in this thread explain the rest of the details. But basically cash in-cash out. Pay cash for something legal with illegal money. Business accounts for it. Edit: just had to add that this can be done quicker and easier with fewer transactions of higher value.
The movie Mickey Blue Eyes starring Hugh Grant is sort of based on this concept. Not an exceptional movie by any means, but decent and entertaining.
Art sellers are not financiers. Certain art are in the millions, and some disreputable art dealers take cash from anonymous buyers. So long as the cash is real, art dealers don’t care where it came from. Let’s say another form of dealer has tons of cash accumulated illegally but can’t use them because law enforcement are looking out for transactions involving cash. So Shady dealer then buys high priced art (anonymously in cash) then later sells that art in the open market and *Presto* now the money is legit. It’s clean money now which is why they call the money “laundered”.
Let me explain in a modern, 2021, terms
Corrupt person A: Hey corrupt country government official, if you sign and buy this covid vaccine batch from my company for 100million I will give you 10million on the side
Corrupt country official: Thats great but the IRS will get me because I wont be able to explain where this 10million came from
Corrupt Person A: Well, can you by any case paint three dots in a huge canvas? I am really into those and would buy it for 10million
Corrupt country official: My son is an artist, I will send you the address of his gallery, I think he had a few paintings with dots in there for sale and one of them costs exactly 10million. Oh, and your company just won the contract despite having better and cheaper options suddenly I chose you.
1 year later
IRS: Hey, how did you get 10million in one year if you are unnemployed
Corrupt Offspring: hey Man, I made this huge sale of one of my paintings, it was a white canvas with 3 dots that took me 10 minutes to make
IRS: What the heck, that doesnt sound legit, how did that sell for 10million?
Corrupt Offspring: chill out man, art is in the eye of who sees it, the value is in our heart.
Let’s say you are a politician in a high office. Someone wants to pay you a bribe, but they can’t just hand you cash. What you do is have a relative, like a son, paint some ridiculous artwork. Then the person that wants to bribe you can pay millions for the artwork. Then later the son can share the money with you.
This is actually far harder, and less common than people make out. There is anti money legislation that tracks transactions over a certain value which includes artwork purchases. Additionally there are clear steps for valuing art works, both on the primary (direct from artist) and secondary markets (has passed through multiple hands). Value is based on previous sales for the most part and there is a lot of publicly available info such as auction records to help assess what an artwork is worth. It definitely used to be prevalent.
Everyone seems to have some schemey way of explaining how this is done, but it’s really quite simple as this article explains:
https://www.nytimes.com/2017/02/19/arts/design/has-the-art-market-become-an-unwitting-partner-in-crime.html
They basically take advantage of the art world because there is no record-keeping.
Example: I’m a criminal, I have $10,000,000 in drug money. I buy fine art (from a legitimate seller) that others agree is worth $10,000,000. I now have a $10,000,000 piece of art. Nobody needs to say who bought or sold it – the art gallery just processes the anonymous transaction.
Now I can either sell my new art for a profit down the road (for clean money) or take loans against it as collateral (banks accept art as assets). Loans are great because they are not taxable, and you only pay a small interest. Clean, tax-free drug money.
Wait until you hear how rich people do taxes! “I’ll pay you $10k to do a painting”…”hey art valuation expert friend of mine, don’t you agree this painting is worth $10m?”…”excuse me art gallery i would like to make a generous charitable donation of this expensive artwork”…”hello IRS, i made $10m in charitable donations this year so I’ll write that off against my tax bill and oops now i owe you nothing”
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