Mon, Feb 27, 2017 - Page 8 News List

Has the art market become an unwitting partner in crime?

Experts say anonymity is not only quaint but also reckless when art is traded like a commodity and increasingly suspected in money laundering

By GRAHAM BOWLEY and WILLIAM K. RASHBAUM  /  NY TIMES NEWS SERVICE

ANONYMITY

Beyond the question of money laundering, some experts say the anonymity of buyers and sellers hinders their ability to track ownership, a key element in establishing a work’s authenticity.

Anonymity was certainly a factor in the success of the scam that took down the estimable Knoedler gallery in New York after 165 years in business. Some US$80 million was turned over by collectors to purchase unknown, albeit fake, “masterpieces” that were brought to market by a Long Island art dealer and her boyfriend. They said all the work had come from a mystery collector who became known as Mr X. In fact, they were being created by a forger in his Queens garage.

Jeanne Greenberg Rohatyn, a New York gallerist and art adviser, said there are situations, as when a scholar is putting together an academic inventory of an artist’s work, where collectors do acknowledge ownership. “We work with the collector,” she said, ‘Would you like to cooperate?’ If they say no, we respect that.”

But she said she would resist a more general turn away from secrecy. “The move toward transparency is always there, but a collector’s private collection is their private collection,” she said. “It is in their home. It is not in the public domain.”

Regulators in other financial sectors have been working to eliminate veils.

In finance, Treasury officials last year began asking banks to identify customers who set up accounts in names of shell companies. In real estate, they introduced a pilot program that requires the full identification of people who buy expensive properties in New York and Miami using cash and shell companies.

But efforts to reduce anonymity in art sales have gone nowhere. In 2012, a New York appeals court ruled that auction houses did have to let buyers know the identity of sellers. But the decision was overturned on appeal.

The auction houses and some experts say that money laundering is rare and the threat overstated.

Sometimes, they said, the names of prior owners are carried in auction catalogs and even in situations where owners sell through an agent, the houses often know their identity because of their broad knowledge of the market.

Many in the art world believe that eliminating anonymity would damage the market and invade privacy. Some sellers, they say, are families only looking to avoid the embarrassment of crushing debt. Others may be museums seeking to quietly de-accession works from their collection without causing a big fuss.

Imposing rules on auction houses, some experts argue, would only push the business toward less regulated markets abroad or into the hands of private dealers — who are not required to announce sales or publish prices.

“We have to tread lightly” said Evan Beard, who advises clients on art and finance at US Trust, “unless we start to see that art is being misused in various ways. You have got to do it without throwing too much sand in the gears.”

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