cleaning dirty money from tainted antiquities and cleaning dirty money with clean antiques, in North America, Europe and Asia: art trading and money laundering

known unknowns in Turkey

The historical development of money-laundering crime in Turkey has been summarised by criminologist Bahadır Küçükuysal and (seemingly former) security official Yasin Köse (who seems to have been purged in the post-coup witch-hunt, though it may be a different person with the same name in the same directorate).

Over the last twenty years, concepts such as corruption and money laundering have started to occupy a serious place on the country’s agenda. However, the start of the systematic handling of the crime of money-laundering in Turkey has been traced to the years of the 1960s. While drug trafficking comprised the greatest source of money in these years, when we come to the 1990s, this situation began to change and tax evasion became the biggest source of black money [dirty money or illicit money].

It is estimated that, in the mid-2000s, nearly half of Turkey’s economy was off the books [a grey economy, an informal economy or an underground economy]. In Turkey, outside of tax evasion and drugs trafficking, the leading types of crimes that constitute sources of black money are stated to be human trafficking and migrant smuggling, antiquities trafficking and arms trafficking.

[Yolsuzluk ve karaparanın aklanması gibi kavramlar yaklaşık son yirmi yıldır ülke gündeminde ciddi yer işgal etmeye başlamıştır. Ancak, Türkiye’de karaparanın aklanması suçunun sistematik bir şekilde işlenmeye başlanması 1960’lı yıllara dayanmaktadır. Bu yıllarda karaparanın en büyük kaynağını uyuşturucu kaçakçılığı oluştururken, 1990’lı yıllara geldiğimizde bu durum değişmeye başlamış ve vergi kaçakçılığı en büyük karapara kaynağı haline gelmiştir.

2000’li yılların ortalarında Türkiye ekonomisinin yaklaşık yarısının kayıt dışı olduğu tahmin edilmektedir. Vergi kaçakçılığı ve uyuşturucu kaçakçılığı haricinde Türkiye’de kara paranın kaynağını oluşturan başlıca suç türleri insan ticareti ve göçmen kaçakçılığı, tarihi eser kaçakçılığı ve silah kaçakçılığı olarak ifade edilmektedir.]

money-laundering and heritage crime in Turkey

In numbers and proportions, forensic statistics reflect the difficulty of prosecuting certain crimes, plus the disincentive to attempt to prosecute such crimes when there is sufficient evidence to charge suspects with other crimes that are easier to prosecute and better recognised as socially concerning. Statistics may also be misleading, due to quirks in analysis and reporting.

For instance, in reports on (the predicate offence of) money-laundering in Turkey, there was 1 case in 230 (0.43 per cent) over 1997-2005 and 1 case in 193 (0.52 per cent) over 2005-2009 where the reports documented (the primary offence of) a violation of the law for the protection of cultural and natural heritage. These statistics suggest a fairly steady rate of 0.43-0.52 per cent between 1997 and 2009.

However, they both included the same case from 2005. So, overall, in a review of cases of money-laundering in Turkey between 17th February 1997 and 31st December 2010, 1 in 404 (0.25 per cent) was documented (or documentable) as a case of heritage crime as well. (fn1)

Unfortunately, technically, it was not specified which offence had been committed under the Law on the Conservation of Cultural and Natural Property (Law Number 2863 – Kültür ve Tabiat Varlıklarına Koruma Kanunu) and no such statistics appear to have been published since these. Nonetheless, these statistics demonstrate that there is laundering of the proceeds of heritage crime in Turkey.

audits of compliance and documentation of non-compliance in Turkey

In 2009, the Financial Crimes Investigation Board (Mali Suçlar Araştırma Kurulu Başkanlığı) of the Ministry of Finance (Maliye Bakanlığı) published and distributed know-your-customer (KYC) guidelines for combatting the laundering of the proceeds of crime and the financing of terrorism (suç gelirlerinin aklanması ve terörün finansmanı). The guidelines were published online and distributed through professional associations, to raise awareness among relevant professionals, including those in the art and antiquities market.

In a review of anti-money-laundering compliance audits that were completed between 2010 and 2018, 12 (1.48 per cent) of the 810 institutions and enterprises were ‘those who are engaged in the purchase and sale or auction of historical artefacts [which is also translated as antiquities], antiques and works of art [tarihi eser, antika ve sanat eseri alım satımı ile uğraşanlar veya bunların müzayedeciliğini yapanlar]’. (fn2)

This number/proportion is not necessarily inappropriate, in and of itself. Resources are limited and are allocated according to risk. Yet, it is indicative of how rarely the authorities have the opportunity to identify any misconduct.

Unfortunately, it was not specified how many (if any) violations of anti-money-laundering (AML) regulations had been proven to have been committed in the art and antiquities market, nor how many (if any) charges had been brought, nor how much (if any) money had been paid in fines for misconduct, nor how many (if any) custodial sentences had been imposed for relevant offences. Still, the activity demonstrates that there is ongoing concern with this risk, as there are ongoing efforts to police other aspects of cultural property crime.

laundering of dirty money with clean art and clean antiques in the United Kingdom and the United States

dirty money and clean art and clean antiques in the United Kingdom

Transparency International has reviewed the enterprises at your service: investigating how UK businesses and institutions help corrupt individuals and regimes launder their money and reputations. According to Transparency International, criminals ‘frequently… invest corrupt wealth into… art’ through the United Kingdom, its Overseas Territories and its Crown Dependencies.

In an analysis of “laundromat” payments to high-value dealers of goods and providers of other high-value services, Transparency International identified 13 transactions for art (3.09 per cent of the total) with a value of 1,051,462.35 GBP (5.97 per cent of the total), and 11 transactions for antiques (2.61 per cent of the total) with a value of 103,561.18 GBP (0.59 per cent of the total), among 421 transactions with a value of 17,612,790 GBP.

(For the avoidance of confusion or misinterpretation, it must be remembered that the category is “antiques”, not “antiquities”. Still, other instructive transactions may have been recorded in the categories of jewellery, auction or high-value goods.)

Notably, the average value of suspicious transactions for art was 80,881.72 GBP, which is much higher than the overall average of 41,736.47 EUR. Meanwhile, the average value of suspicious transactions for antiques was 9,414.65 GBP, which is much lower than the overall average and just above the threshold of 10,000 EUR (or somewhere around 8,636 GBP) in the European Union, where payments in cash would require due diligence checks on clients. Most, if not all, of these payments must have been made ‘from anonymous shell companies with Lithuanian bank accounts’, as 419 (99.29 per cent) of the 422 were. (One of the 422 was not included in the table of 421 transactions.)

It is intriguing to consider how many transactions may have been made, just under the threshold, with market operators who are not high-value dealers. Under the Fifth Anti-Money-Laundering Directive (5AML, to be implemented within the European Union by 10th January 2020), any transaction by a trader in art for goods over 10,000 EUR will be subject to due diligence checks.

At least one of the businessmen – and they are typically businessmen – who has been (possibly inadvertently) associated with a laundromat scheme ‘started in the antiques trade‘; he also ‘owns one of Russia’s biggest private museums’, which is a museum of vehicles.

dirty money and clean art in the United Kingdom and the United States

Transparency International also noted that financier Low Taek Jho (also known as Jho Low) was alleged to have bought one painting for tens of millions of pounds from or through Sotheby’s London auction house and ‘tens of millions of pounds [more] of [other] artwork from [or through] Christie’s New York’ auction house, with laundered money that was the proceeds of embezzlement/’theft’ from the state sovereign wealth fund of Malaysia (1MDB), then to have used at least some of that art as ‘collateral’ for further transactions for other luxury goods. As reported by Artsy, Low is expected to surrender a range of artworks as part of the ‘largest civil forfeiture’ in the history of the United States.

footnotes

fn1: This is a compilation of statistics from studies of 183 cases in 1997-2004, plus 47 cases in 2005, 39 cases in 2006, 43 cases in 2007, 42 cases in 2008, 23 cases in 2009 and 27 cases in 2010. They were published in overlapping reports on 1997-2004, 1997-2005, 2003-2007, 2004-2008, 2005-2009 and 2006-2010.

fn2: This is a compilation of statistics from studies of 69 audits in 2010, 120 audits in 2011, 53 audits in 2012, 130 audits in 2013, 88 audits in 2014, 78 audits in 2015, 96 audits in 2016, 117 audits in 2017 and 59 audits in 2018. They were published in overlapping reports on 2013, 2010-2014, 2011-2015, 2012-2016, 2013-2017 and 2014-2018. Among a range of institutions and enterprises, other targets included financial institutions; financial service providers; cargo/shipping companies; and sellers of precious metals, stones and jewels.

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