In a country where kids’ lemonade stands get shut down by overzealous health inspectors, it’s difficult to imagine a multibillion dollar industry operating under near-zero regulations. But somehow, the U.S. art market, which accounts for 44 percent of global art sales—around $28.3 billion in 2019—is cloaked in mutual secrecy between purchasers and sellers. This opaqueness attracts opportunists who use the arts and antiques trade to launder money, and—as recently confirmed through a bipartisan Senate investigation—to evade U.S. sanctions.
A congressional report released Wednesday details how sanctioned Russian oligarchs with close personal and financial ties to President Vladimir Putin dealt in high-value art to gain access to the U.S. economy. Arkady and Boris Rotenberg maneuvered the art world post-sanction—racking up $18.4 million in art transactions—to take advantage of the largest legal, unregulated industry in the country.
The art and antiques trade has long earned the reputation as a place for the wealthy to turn ill-gotten gains into legitimate investments. The industry deals in high-dollar items, anonymity, and large cash purchases—allowing individuals like the Rotenbergs to covertly buy up expensive work and lock it away until it serves a useful purpose. Not to mention, art is an illiquid asset and acts as a mostly tax-free way to stash large sums of money for longer periods of time.
To uncover how Russian oligarchs were apparently eluding sanctions, investigators compiled more than 1 million documents, interviews with 20 individuals, and information requests from seven financial institutions and four major auction houses. Their findings? “The art industry currently operates under a veil of secrecy allowing art advisors to represent both sellers and buyers masking the identities of both parties, and as we found, the source of the funds. This creates an environment ripe for laundering money and evading sanctions,” Sen. Rob Portman said in a statement.