From the New York Times, June 19:
Secrecy has long been part of the art market’s mystique, but now lawmakers say they fear it fosters abuses and should be addressed.
The federal agents who raided a drug dealer’s house in a suburb of Philadelphia found marijuana and, to their surprise, $2.5 million in cash stashed in a secret compartment beneath a fish tank.
But they were even more surprised to discover so much art — 14 paintings on the walls and another 33 stacked in a storage unit a few miles away from the home of the dealer, Ronald Belciano. The artists included Renoir, Picasso and Salvador Dalí.
“That jumped out at us,” said Brian A. Michael, special agent in charge for Homeland Security Investigations Philadelphia. “That amount of artwork was not something you come across in every investigation.”
It turned out, Mr. Belciano used the art to launder some of his drug cash, purchasing the works from an established gallery near Philadelphia’s Museum Row.
In 2015, he was sentenced to more than five years in prison for dealing drugs and for laundering the illicit proceeds by taking advantage of one of the art market’s signature features — its opacity.
Billions of dollars of art changes hands every year with little or no public scrutiny. Buyers typically have no idea where the work they are purchasing is coming from. Sellers are similarly in the dark about where a work is going. And none of the purchasing requires the filing of paperwork that would allow regulators to easily track art sales or profits, a distinct difference from the way the government can review the transfer of other substantial assets, like stocks or real estate.But now authorities who fear the Belciano case is no longer an oddity, but a parable of how useful art has become as a tool for money launderers, are considering boosting oversight of the market and making it more transparent.
In January, Congress extended federal anti-money laundering regulations, designed to govern the banking industry, to antiquities dealers. The legislation required the Department of the Treasury to join with other agencies to study whether the stricter regulations should be imposed on the wider art market as well. The U.S. effort follows laws recently adopted in Europe, where dealers and auction houses must now determine the identity of their clients and check the source of their wealth.
“Secrecy, anonymity and a lack of regulation create an environment ripe for laundering money and evading sanctions,” the U.S. Senate’s Permanent Subcommittee on Investigations said in a report last July in support of increased scrutiny.
To art world veterans, who associate anonymity with discretion, tradition and class, not duplicity, this siege on secrecy is an overreaction that will damage the market. They worry about alienating customers with probing questions when they say there is scant evidence of abuse.
“We are in the paranoid-terrified phase of what’s going to come down the pike,” Andrew Schoelkopf, then the president of the Art Dealers Association of America, said at an industry panel this year. “It’s going to be a whole lot of paperwork and a whole lot of compliance and I don’t think we will extinguish much of a problem.”
Their concerns are great enough that lobbyists for the dealers’ association and major auction houses have been trying in Washington to shape the evolving policy on this and other regulatory measures. Since 2019, the lobbying bill for Christie’s, Sotheby’s and the dealers’ association has approached $1 million.
Still, there is no question the art market has exploded in value and scope from the sleepy days when its customs were created. Paintings routinely sell for $10 million, $20 million, often as much as the penthouses in which they hang. Though the profits from art sales are subject to the robust capital gains tax on luxury goods of 28 percent, the I.R.S.’s ability to track who is accurately reporting windfalls is something of a struggle. Even figuring out who sold what is a hurdle. Half the purchases are in private, not at public auction, so many prices never become public....
....MUCH MORE
As a side note, anyone dealing in Dali should be presumed a bit shady. He signed something like 60,000 blank sheets of paper that subsequently had paintings/primts put on them.
In many cases not as easy to spot as "Nazi buddha from space might be fake".