Russians Are Using Art Storage to Evade Sanctions, UK Says
The U.K. issued an alert this week warning that Russian oligarchs may be using artwork storage facilities to hide their frozen assets, evade sanctions or launder money. People and companies involved in the art industry should be conducting “regular due diligence checks to understand any change in a client’s circumstances, or those of elites they may represent,” the country’s National Crime Agency, Office of Financial Sanctions Implementation and other agencies said.
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The U.K. said sanctioned people are “exploiting” these storage facilities, and warned that “inadequate or irregular due diligence checks open the door for criminals or corrupt professional service providers to circumvent” sanctions. The alert includes several red flags that may signal sanctions evasion, including a client attempting to transfer artwork ownership to a family member, business associate or other “close contact”; trying to sell the art quickly or move it to another country; and using shell companies or “complex corporate” structures that make the ultimate beneficial owner unclear.
Companies that find any activity that they think may be a sign of sanctions evasion can file a suspicious activity report (SAR) with the U.K., the alert said. Those reports should include “XXJMLXX” within the text and reference this alert by also including “0735-NECC ... within the relevant field on the NCA SAR Portal.”