Reported by DEBORAH LEHR

On February 23, a day before the second anniversary of the invasion of Ukraine and a week after the suspected murder of Alexei Navalny, President Joe Biden imposed over 500 new sanctions targeting “Russia’s war machine”. 

Unfortunately, this strengthened sanctions regime is undermined by a major oversight: the exemption of the American art market, worth more than $30bn, from standard laws and regulations. This continues to give our adversaries an easy back door into the US, and with it the world’s largest economy.

It is now well documented that art provides a lucrative and untraceable funding source for blacklisted individuals and entities. Last year, Bloomberg revealed that Federal prosecutors were targeting major auction houses as part of a wider investigation into sanctions evasion by Russian oligarchs. Previously, in 2020, a Senate report had exposed how “key allies of the Russian state”, Arkady and Boris Rotenberg, laundered millions through the American art market in full evasion of existing sanctions.

The American art market is a black hole to law enforcement, because it is not required to assist the Federal government with preventing or detecting financial crimes, one consequence of the sector’s avoidance of money-laundering and counterterror laws. Congress or the Treasury department have already applied these rules to every industry of comparable risk and size, including dealers in precious metals, stones and jewels; sellers of cars, boats and planes; and even “ma and pa” pawn shops. Art thus remains the Wild West of the regulatory landscape.

Read full report: https://www.ft.com/content/ad219082-9af7-4154-a779-4a8db54e2fa2