Money Laundering and Terrorist Financing in the Art and Antiquities Market
The Financial Action Task Force (FATF) is an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction. The FATF Recommendations are recognised as the global anti-money laundering (AML) and counter-terrorist financing (CFT) standard
“FATF (2023), Money Laundering and Terrorist Financing in the Art and Antiquities Market” report points to vulnerabilities associated with Cultural Objects and the Market. The aim is to help different countries better understand money laundering threats associated with various types of markets for cultural objects, including common methods, techniques, patterns, and trends.
Case study – India (page 24 of the FATF report)
Mr. A was managing director and CEO of an Indian bank who misused his position during his tenure. He sanctioned loans of the rupee equivalent of USD 628 million to business entities incurring losses or with negative credit, deliberately violating existing norms and regulations.
A money laundering investigation revealed that Mr. A used his influence to sanction the loan to a loss incurring entity, Company B. Investigations further revealed that Company B diverted the loan to 79 shell companies including Company C, which was controlled and owned by Mr. A and his daughters. Company C received USD 79 million and used part of the funds to purchase assets including art from famous painters and influential people. Mr. A invested a significant amount of proceeds in buying art of famous artists. Investigations revealed that he had purchased around 44 paintings.
Mr. A had received awards and accolades from several organisations in inappropriate ways. Investigation revealed that, in order to pay kickbacks for receiving awards, Mr. A purchased mediocre art from politicians and in turn paid huge kickbacks through banking channels, projecting them as genuine pieces of art. In one such incident, Mr. A purchased a piece of art from the close relative of a member of the ruling political party at that time for USD 264 000. However, the investigation revealed that this was an over-valuation, and that that the price paid was not for art, but rather was a bribe to influence the awarding of the prestigious Indian award ‘Padma Bhushan’ for himself.
The trial is ongoing and Mr. A has been in judicial custody since March 2020. (The Newsroom24x7 readers can easily pinpoint the players involved in this case study)