How Money Laundering Works In The Art World
Works of art have long been identified, and sometimes even romanticized, as ideal ways for racketeers to launder money. There’s a thread of logic here: the art world typically accommodates those that want to anonymously buy high-dollar paintings, and on top of that, the industry allows large cash deals. For those looking to launder money, it’s difficult to conjure up a more attractive set of circumstances than those.
There also seems to be plenty of instances where art has played a role in the act of money laundering. Consider that when the Mexican government passed a law in the early 2010s to require more information about buyers, and how much cash could be spent on a single piece of art, the market cratered, as sales dipped 70 percent in less than a year . Many believed that was because Mexican cartel rings had previously been the biggest buyers in the market.
So how does one launder money in the art world? The Globe and Mail reports that some of the cases are very straightforward. Let’s suppose someone has $10 million dollars on hand. They could buy a Picasso at an auction in, say, Geneva, and have the painting immediately moved to storage at a “freeport,” or a high security storage space near the airport. The painting could be then anonymously sold without ever moving an inch, and the new buyer would have it retrieved from the same freeport. Suddenly, the original buyer, turned seller, has money from what is considered a legitimate business deal. The Economist estimated in 2013 that the Geneva freeport might hold $100 billion worth of U.S. art , sitting tucked away in a space that also functions as a tax haven.
