Blacklisted foreigners such as terrorists and drug traffickers could buy expensive artworks to get around sanctions meant to shut them out of the American financial system, the feds say. US Treasury officials spelled out their concerns in an advisory
Author: Noah Manskar
Published: 2020-11-03 10:53 am
High-end art sales could be used to avoid sanctions, feds warn
nypost.com

Blacklisted foreigners such as terrorists and drug traffickers could buy expensive artworks to get around sanctions meant to shut them out of the American financial system, the feds say.

US Treasury officials spelled out their concerns in an advisory warning high-end art galleries, collectors, brokers and auction firms to watch out for such shady buyers — or else face possible penalties.

The art market is particularly vulnerable to sanctions violations because it affords buyers and sellers a high degree of anonymity with little transparency, according to the Treasury’s Office of Foreign Assets Control, or OFAC, which enforces sanctions rules.

Intermediaries and shell companies are often used to buy, sell or hold expensive artworks and to make and receive payments, which allow bad actors “to obscure their true identities from other market participants, and help to hide prohibited conduct from law enforcement and regulators,” the office said in its Friday advisory.

“The mobility, concealability, and subjective value of artwork further exacerbate its vulnerability to sanctions evasion,” the document reads.

The OFAC said there’s a risk the art market could be abused by people on its “List of Specially Designated Nationals and Blocked Persons,” which includes narcotics traffickers and terrorists who are banned from doing business with Americans.

As one example, the office cited the case of Nazem Said Ahmad, a Lebanese diamond dealer and art collector whom the Treasury has sanctioned for allegedly financing Hezbollah. The feds say Ahmad stored some of his personal cash in valuable artworks “in a preemptive attempt to mitigate the effects of US sanctions.” Ahmad’s daughter denied the allegations when the sanctions were announced last year, according to The New York Times.

The OFAC warned art dealers to mitigate their exposure to sanctions violations as they could face civil penalties for dealing with blacklisted individuals. The office also affirmed that it will enforce sanctions in transactions where a blocked person has an interest to the extent that the artwork is primarily an investment asset.

“US persons involved in the high-value artwork trade should be mindful of this sanctions risk,” the office said in the advisory.

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