Art dealers arrest throws spotlight on lack of AML regulation

The arrest of a leading art dealer over allegations of price fixing has thrown the spotlight on how the trade in art is relatively lightly regulated in terms of anti-money laundering (AML) frameworks.

Earlier this year, Yves Bouvier was arrested on his arrival at the Monaco home of his long-time client, Russian billionaire Dmitry Rybolovlev.

Forgery and fraud
The Russian billionaire owner of AS Monaco football club had discovered that Bouvier had invoiced him US$118 million for a painting the art dealer had acquired on his client’s behalf for US$93 million.

Rybolovlev subsequently filed a complaint in Monaco against Bouvier alleging document forgery and fraud.

After his arrest the art dealer was charged with fraud and complicity in money laundering. He is free on bail.

Calls for regulation
Several commentators, including the economist who rose to prominence for predicting the credit bubble, Nouriel Roubini, are calling for tighter regulation because art, he claims, is commonly used for tax avoidance, evasion and money laundering.

“You can buy something for half a million, not show a passport and ship it. Plenty of people are using it for laundering,” Roubini said earlier this year.

Freeport concerns
Freeports – warehouses in tax-free zones – are a particular concern. Several galleries and art lenders have offices in them where clients can view, buy and sell art.

Goods sold in them are not subject to value added tax. No withholding tax is collected on capital gains, though sellers may need to report to the tax authority in their own country.

Categories: Trade Based Financial crimes News

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