By AML Intelligence Correspondent
BRITAIN’s National Crime Agency (NCA) has issued an alert to artwork storage facilities, warning of potential criminal exploitation of the sector by sanctioned Russians.
The alert highlights the need for the sector to conduct regular due diligence checks to understand any change in a client’s circumstances, or those of elites they may represent.
“High-net-worth individuals, such as Russian oligarchs hold art in specialist storage facilities for a range of reasons, including secure storage of art as an investment or as a store of value for tax benefits,” the NCA said.
“It is known that criminals, including sanctioned individuals, are exploiting these services to evade sanctions and launder the proceeds of crime,” the agency added.
Inadequate or irregular due diligence checks open the door for criminals or corrupt professional service providers to circumvent legislation, putting the sector at risk and undermining the sanctions regime, the agency said in a statement.
Adrian Searle, Director of the National Economic Crime Centre at the NCA said: “Sanctions evaders undermine UK national security, working against our foreign policy objectives which promote international peace and security, and the rule of law. For this reason it is vital that we close down every opportunity they may seek to exploit.
“The potential value that can be transferred through the art market makes the sector as a whole attractive to criminals, money launderers and designated individuals. This is why we need the sector to increase its vigilance and embrace their role as the gate keeper of the legitimate art market.”
The NCA said criminals test organisations’ due diligence processes by conducting legitimate business activity, and then storing illicit items or requesting sudden service changes, thereby concealing and moving assets that may be proceeds of crime or subject to sanction.
“All art market participants – including those working in the art storage sector or in a linked specialist service provider capacity – should have the ability to identify within their business any change in client status or suspicious activity,” it added.
Signs to look out for include:
- Changes in client circumstances. Are the international sanctions listings checked on a daily basis?
- Attempts to transfer artwork or cultural property ownership to a family member, close contact, business associate or other intermediary
- Attempts to sell artwork or cultural property quickly, or move it to another jurisdiction
- Use of front or shell companies, or complex corporate or trust structures where the Ultimate beneficial Owner is unclear
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