Economic sanctions and the art market
The application to artworks of asset freezes and transaction bans on sanctioned persons, which the market, opaque and reliant on intermediaries, long allowed to be circumvented.
An artwork is a high-value, portable asset, often held through a shell company and sold by intermediaries who do not reveal their clients' identity. These features make it a way to keep or move wealth beyond the reach of sanctions. Sanctions regimes nonetheless freeze all assets of designated persons, artworks included, and ban providing them with services. For auction houses, galleries, shippers, freeports and insurers, the risk is twofold: unknowingly taking part in a prohibited transaction, and seeing an insured work frozen or confiscated. Insurers apply a sanctions exclusion clause that relieves them of paying when payment would expose them to a breach, and they screen insureds and the beneficial owners of owning companies. It is one of the points where fine art meets political risk most directly.
A July 2020 report by the US Senate Permanent Subcommittee on Investigations found that Russian businessmen sanctioned since 2014 had bought more than 18 million dollars of art in the United States through shell companies and intermediaries.
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