Russian oligarchs used trade in high-value art and shell companies to evade sanctions

The US Senate’s permanent subcommittee on investigations has published a report revealing how Russian oligarchs used artworks and shell companies in a multi-million dollar trade-based money laundering operation.

The report alleges that Arkady and Boris Rotenberg and Arkady’s son, Igor, used transactions involving high-value art to evade sanctions imposed on them by the US on 20 March 2014 in response to Russia’s invasion of Ukraine and annexation of Crimea.

High-value art

Investigators traced purchases of high-value art back to anonymous shell companies linked to the Rotenbergs, the subcommittee says.

It also says the oligarchs actively participated in the US art market by purchasing over US$18 million in art in the months following the  imposition of sanctions in March 2014.

Shell companies

Several shell companies linked to the Rotenbergs also transferred over US$120 million to Russia during a four-day window between US President Barak Obama’s 16 March 2014 executive order stating that the US would be sanctioning certain Russian individuals and the treasury department specifically naming the Rotenbergs as sanctioned on 20 March 2014 according to the subcommittee.

It says certain Rotenberg-linked shell companies continued transacting in the US financial system long after the family members were sanctioned. The subcommittee determined that these Rotenberg-linked shell companies engaged in over US$91 million in transactions post-sanctions.

Ineffective sanctions

The report questions the effectiveness of sanctions, noting that to date, Russia has not withdrawn from Crimea and has even expanded its military operations in the surrounding waters.

The subcommittee also concluded that if wealthy Russian oligarchs can purchase millions in art for personal investment or enjoyment while under sanctions, it follows that their businesses or hidden resources could also continue accessing the US financial system.

The US Senate’s Permanent Subcommittee on Investigations report, The Art Industry and US Policies that Undermine Sanctions, can be found here.

Categories: Trade Based Financial crimes News

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