Phoenix Compliance Essentials #9
Today’s focus: money laundering risks in the art sector
➡️ In Monaco, the art market plays an active role in the economy. Due to certain characteristics, this sector is particularly exposed to money laundering and terrorist financing risks.
Several factors explain this heightened exposure:
– The prevalence of cash payments,
– The growth of online sales,
– The possibility of conducting transactions anonymously,
– The speculative nature of certain transactions.
➡️ These factors create an environment conducive to the introduction or concealment of illicit funds within the legitimate market, as illustrated by several internationally documented cases.
👉 Example 1 – Philip Rivkin (United States, 2016)
Convicted of a large-scale renewable energy certificate fraud scheme, he laundered several million dollars by purchasing more than 2,000 works of art, including USD 15 million worth of photographs.
💡 Objective: to convert fraud proceeds into legitimate, marketable assets that could be resold through the legal market, thereby concealing their illicit origin.
👉 Example 2 – The Rotenberg brothers (U.S. Senate report, 2020)
Sanctioned in 2014 by the Office of Foreign Assets Control (OFAC) for their links to the annexation of Crimea, Arkady and Boris Rotenberg used a network of offshore shell companies to acquire more than USD 18 million worth of artwork in the United States.
💡 Objective: to circumvent sanctions, conceal their identity through opaque legal structures, and convert restricted funds into valuable physical assets that are difficult to trace.
➡️ These examples illustrate common typologies:
– Anonymous transactions,
– The use of opaque structures,
– Limited traceability of financial flows and beneficial owners.
➡️ Regulatory developments in response to these risks:
– The Fifth EU AML/CFT-P-C Directive extended AML/CFT-P-C obligations to art market participants for transactions amounting to EUR 10,000 or more.
– In parallel, the Responsible Art Market (RAM) Initiative provides practical tools aimed at strengthening the culture of compliance within the art sector.
