Originally Syndicated on August 8, 2023 @ 5:12 pm
Ukraine’s National Agency on Corruption Prevention has recently launched a groundbreaking initiative to combat money laundering and illicit financial activities by sanctioned Russian oligarchs. The agency has developed a comprehensive database that tracks the ownership of valuable art pieces believed to have been bought or sold by these individuals.
With an estimated value of $1.3 billion, the artworks listed in the database range from iconic pieces by renowned artists such as Monet, Da Vinci, Picasso, and Warhol.
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The Need for Artworks Market Regulation
The artworks market has long been an attractive avenue for money laundering and asset transfer due to its relative tax regulations and lack of a formal ownership register. The subjective nature of art valuation allows for easy manipulation of prices, making it an ideal vehicle for hiding and moving illicit funds. Ukrainian officials have recognized this vulnerability and have taken a proactive step toward addressing it. By creating the “War and Art” database, the National Agency on Corruption Prevention aims to ensure transparency in the art market and prevent sanctioned individuals from using art objects to circumvent financial sanctions.
Tracking Art Owned by Sanctioned Russian Oligarchs
The database compiled by Ukraine’s National Agency on Corruption Prevention includes a wide range of artworks owned by sanctioned Russian oligarchs. Among the notable pieces listed are a Monet lily pond painting, a Da Vinci depiction of Christ, a Picasso portrait, and an iconic Andy Warhol screenprint of Marilyn Monroe. These artworks, along with many others, are believed to have been acquired and sold by individuals who have been sanctioned by Ukraine and other Western countries for their alleged involvement in supporting Russian aggression.
The works listed in the corruption agency’s current database involve some instantly recognisable names and images: a $10.4 million model of Auguste Rodin’s “Thinker,” for example, is listed as being owned by Dmitry Rybolovlev, a billionaire oligarch sanctioned by Ukraine, who also owns Monaco’s soccer club.
A slew of wealthy Russians, many of them arts patrons, have been hit with economic sanctions by the European Union, the UK, and the US intended to impede their ability to make or move money overseas since the start of the Russian invasion of Ukraine in February 2021.
High-profile Russians named on Western sanction lists include Russia’s culture minister, Olga Lyubimova. Oligarchs Roman Abramovich and Alisher Usmanov—both prolific blue-chip collectors—are among the individuals sanctioned by the EU.
Ukrainian-born, Russian-Israeli oligarch Mikhail Fridman, who is sanctioned by the EU and the UK, is said to own an iconic Andy Warhol screenprint of Marilyn Monroe worth $38.2 million.
A Wassily Kandinsky study, valued at $23 million, is listed as owned by Petr Aven, an oligarch sanctioned by the UK who has strong ties to President Vladimir Putin.
The new databases detail the provenance, or history of ownership, of numerous prized artworks, including a portrait of Marilyn Monroe by Andy Warhol acquired by a close associate of Russian President Vladimir Putin, Mikhail Fridman, and Leonardo da Vinci’s Salvator Mundi, which was once owned by the billionaire Dmitry Rybolovlev. (Rybolovlev auctioned Salvator Mundi at Christie’s in 2017, where it sold for $450.3 million.)
“Currently, the section contains information on more than 300 art objects,” the agency said. “Among their owners are Russian billionaire Viatcheslav Kantor, model Daria Zhukova, rapper Timur Yunusov (Timati) and other individuals who are under sanctions for directly supporting Russia’s war against Ukraine.”
Daria Zhukova is more popularly known as Dasha Zhukova; she has not been sanctioned. A major patron in the art world, she also co-founded the Garage Museum of Contemporary Art with Abramovich, her ex-husband. She continues to serve on a number of museum boards, including the Los Angeles County Museum of Art and the Metropolitan Museum of Art, the latter of which lists her as Dasha Niarchos, the surname of her current husband Stavros Niarchos II.
The Loopholes in the Art Market
The art market’s inherent characteristics make it an attractive option for money laundering and asset transfer. The lack of a centralized ownership register and the ease with which artworks can be bought and sold across international borders provide ample opportunities for sanctioned individuals to hide their wealth. The subjective valuation of artworks also allows for price manipulation, making it challenging to accurately assess the true value of an artwork. These loopholes in the art market have enabled Russian oligarchs and other individuals under sanctions to continue profiting and evading financial restrictions.
The Impact of Ukraine’s “War and Art” Portal
Ukraine’s “War and Art” portal serves multiple purposes in the fight against financial corruption. Firstly, it provides a valuable resource for art market participants to conduct sanctions checks, ensuring that they do not inadvertently deal with artworks owned by sanctioned individuals. By making this information easily accessible, the portal helps promote transparency and discourage the unwitting involvement of art market actors in illicit financial activities.
Secondly, the database acts as a tool for freezing, confiscating, and potentially transferring assets to Ukraine. Identifying artworks owned by sanctioned Russian oligarchs allows authorities to take appropriate legal action to prevent the further circulation of these assets. By doing so, Ukraine aims to disrupt the flow of illicit funds and assert its commitment to combating financial corruption.
The Challenge of Tracking Art Ownership
Tracking art ownership is a complex task due to the absence of a formal register and the potential for frequent changes in ownership. The National Agency on Corruption Prevention acknowledges this challenge and actively seeks open-source information on the ownership of other valuable artworks.
The process of updating the database can be arduous, as ownership information may be concealed or transferred to evade scrutiny. Nevertheless, the agency’s ongoing efforts to gather and document information on sanctioned individuals’ art holdings are crucial steps toward achieving greater transparency in the art market.
Similar Initiatives and the Role of Art Registers
Ukraine’s “War and Art” portal is not the first attempt to regulate the art market and combat illicit financial activities. Projects like the Art Loss Register have long been utilized by art dealers and insurers to verify the provenance of artworks and ensure they are not registered as stolen.
The establishment of formal art registers could significantly enhance transparency in the art market, making it easier to track ownership and identify artworks associated with sanctioned individuals or illicit activities. However, the implementation of such registers would require international cooperation and industry-wide adoption to be truly effective.
Conclusion
Ukraine’s launch of the “War and Art” portal demonstrates its commitment to combating financial corruption and preventing sanctioned individuals from exploiting the art market as a means of money laundering. By tracking the ownership of valuable artworks, the National Agency on Corruption Prevention aims to promote transparency, deter unwitting involvement in illicit financial activities, and disrupt the flow of illicit funds.
Although challenges remain in tracking art ownership and regulating the art market, initiatives like Ukraine’s database represent significant progress in the fight against financial corruption. Through continued international cooperation and the establishment of formal art registers, a more transparent and accountable art market can be achieved.
