How does money laundering work in the commercial art world?

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How do people use the commercial art to launder money?

For context, I work in commercial galleries and it’s something I’m trying to understand to work in a safer way with collectors. Thanks!

In: 25

say you got $100,000 through illegal means. you cant just put it in the bank, or the government will notice.

so instead, you make 100 paintings. your art is practically worthless, so you sell them for $10 each in cash, but then on your taxes you lie and say you sold them for $1,000 each. These smaller transactions won’t be noticed, and it provides a plausible source for the money.

Let’s say I’m a criminal of some sort looking to launder my money. All I have to do is find someone who could credibly invest in art, slide them my dirty money under the table and then have them buy a piece of artwork from me. The art transaction is entirely above board, so now my formerly dirty money is ‘clean’ – it can be traced to that art transaction.

The reason you use art is that the value is highly subjective and involves easily transported goods of high value. You could do the same thing with lumber, but you’d need trainloads full of the stuff and governments would find it highly suspicious if you paid many times the commodity value for lumber.

Art has fluid value… and price is different to everyone. So you can move money through the art world by over inflating some art value by simply paying more for it without actually paying more for it.

They donate maximum amount to their favorite politician allowed by law then buy paintings by said politicians SO or kids.

Or

Someone owes Vinny money so they buy a painting from Vinny for the amount they owe Vinny.

Then they get an appraiser to value it at a high price and loan it to a museum.

The biggest one is layering. They “layer” through a series of buying and selling high pieces to disguise the origins of the money and make it clean. This should’ve been apart of your AML training.

Lots of people already covered the how but if you want to learn more the book “The 12 Million Dollar Stuffed Shark” is really depressingly good. Should be required reading for first year art majors