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U.S. Senate Report Takes a Swing at Money Laundering in the Art Market But Strikes Out on Substance

Posted by Nicholas O'Donnell on August 12, 2020 at 2:41 PM

A recent report by the U.S. Senate Permanent Subcommittee on Investigations (headlined by Chairman Senator Rob Portman, Republican of Ohio, and Ranking Member Tom Carper, Democrat of Delaware) has drawn widespread attention for its damning statements about the international art market. Focusing on purchases of art from major auction houses by Arkady and Boris Rotenberg, two Russian nationals described as “oligarchs” by the report, the Subcommittee makes a series of pronouncements about the supposed prevalence of money laundering in the art market, and the need for regulation to address this perceived problem. Yet upon closer read, the report is a recycling of clichés about the art market, a detailed description about the considerable diligence by the auction houses far beyond what any even theoretical regulation would require (thus begging the question of what lesser regulation would accomplish), and no discussion or empathy at all for the vast majority of small art businesses that could not possibly comply with such regulation and stay in business, let alone actually combat money laundering. In other words, in concluding that two men laundered money, the Senate committee deduces that the practice is rampant. This hardly follows as a matter of logic. Far from supporting the case for sweeping financial regulation of the art market, the report unintentionally makes the opposite point.

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Topics: OFAC, Vladimir Putin, Uniform Commercial Code, House of Representatives, New York Times, Responsible Art Market initiative, Money laundering, FinCEN, Financial Crimes Enforcement Network, Permanent Subcommittee on Investigations, Boris Rotenberg, oligarch, shell companies, suspicious activity reports, Banking Secrecy Act, Politically Exposed Persons, Arkady Rotenberg, Treasury, ultimate beneficial owner, UBO, Corporate Transparency Act of 2019, Tom Carper, Office of Foreign Assets Control, Rob Portman

Does The Art World Have a Russia Problem?

Posted by Nicholas O'Donnell on August 7, 2013 at 11:15 AM

Several overlapping issues in recent months have turned what was an awkward elephant in the room into a major issue facing the art world today. Namely: the increasing role that Russia is playing in restitution, loans and exhibition controversies has aggregated to Vladimir Putin an extraordinary amount of influence over these major international legal issues. Combined with the Edward Snowden controversy (and the bizarre story of Putin’s theft of Robert Kraft’s New England Patriots Super Bowl ring), it seems quite clear that Putin enjoys that spotlight. That has not proven to be good news for the art world.

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Topics: Nazi Germany, Russia, Germany, WWII, Foreign Sovereign Immunities Act, Red Army, Edward Snowden, FSIA, Restitution, New England Patriots, Super Bowl, Vladimir Putin, Robert Kraft, Soviet Union

President Putin Vows to Keep Chabad Library in Russia

Posted by Nicholas O'Donnell on February 20, 2013 at 4:51 AM

Backing off some of the more belligerent comments made recently by the Foreign Ministry, Russian President Vladimir Putin has nonetheless signalled that Russia has no plans to return the Chabad library to comply with a 2010 judgment or the more recent sanctions order. Both Reuters and the Art Newspaper reported that Putin proposed to store the Schneerson library in the newly built Jewish Museum in Moscow. Putin stated "The Schneerson Collection belongs to Russia. . . .If we now open a Pandora's box and start satisfying similar requests, there will be no end to these claims. Maybe one day we will be able to do this, but now we are absolutely not ready for this. This is impossible," Putin said." That statement simply begs the question of what the Pandora's box is that Putin fears. Russia has, for example, refused for years even to discuss cultural artifacts taken to the Soviet Union as the German army retreated in World War II. The more conciliatory tone is a marked change from recent threats to try to find the United States in default in retalation for the recent sanctions order, although it does little to address the fundamental dispute.

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Topics: Moscow Jewish Museum, Restitution, Schneerson library, Foreign Sovereign Immunities, Vladimir Putin, Chabad

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About the Blog

The Art Law Report provides timely updates and commentary on legal issues in the museum and visual arts communities. It is authored by Nicholas M. O'Donnell, partner in our Art & Museum Law Practice.

The material on this site is for general information only and is not legal advice. No liability is accepted for any loss or damage which may result from reliance on it. Always consult a qualified lawyer about a specific legal problem.

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