Acquisition of a work of art as a way of money laundering
Transactions with works of art are one of the most sophisticated and, at the same time, very common ways of money laundering.
The criminogenic potential of such transactions is due to the fact that it is often very difficult to reliably determine the artistic value and, thus, the monetary price of a work of art.
There exist some mathematical formulas being used by experts to calculate the value of a work of art. However, it is not always possible to obtain reliable results by using them. The value of a work of art may change along with the ratings of its author and the demand for his works, over time, etc. There are also other objective factors that can affect the value of a work of art (whether the author is alive or not, the availability of original, the publication of the work of art in the general catalog of author’s works, whether there are established facts of forgery of this work or not, etc.).
An example is the picture “Algerian Women” by Pablo Picasso. The work originally belonged to American private collectors Victor and Sally Ganz. In 1956, they purchased the complete series of 15 pictures from Picasso’s agent Daniel Kahnweiler for $ 212,500. In November 1997, the picture was sold at auction to a collector from Saudi Arabia for $ 31.9 million. In 2015, the same work, having a starting price equal to $ 140 million, was sold for $ 179 million. This is a vivid confirmation of variability of work of art’s price.
Even very dramatical changes in work of art’s price are quite common. An intruder can take advantage of this in order to “launder” money or other assets acquired by criminal means.
Consequently, any transaction of purchase or sale of a work of art potentially entails risks of applying anti-money laundering legislation.
In order to minimize these risks, it is necessary to exercise maximum care when identifying work of art’s seller or buyer.