International Art Market Helps Finance Terrorism, Experts Tell Congress

In the US, Officials from the State Department, the Department of Homeland Security, and the Smithsonian testified before the House Financial Services’s Terrorism and Illicit Finance Sub-Committee on Friday morning at a hearing dedicated to  'The Exploitation of Cultural Property: Examining Illicit Activity in the Antiquities and Art Trade' (Leo Doran, 'International Art Market Helps Finance Terrorism, Experts Tell Congress' Inside sources, June 24, 2017.

Knowingly or unknowingly, super-wealthy art collectors in the United States and Western Europe are propping up terrorist groups like Al-Qaeda and ISIS through the purchase of looted cultural artifacts from war zones. The challenge for law-enforcement, customs officials, and art dealers is the opaque nature of the international art market. The longstanding problem of black and grey-market transactions among dealers and collectors famously led one critic, Robert Hughes, to declare “apart from drugs, art is the biggest unregulated market in the world.”

Brian Daniels, of the Smithsonian Institution and one of the expert witnesses invited to testify, added more details of hos the trade operates, including adding:

Indonesia, Thailand Singapore

experts have a rough sense of the path the stolen goods take before eventually ending up in private and public collections. Daniels testified that to his knowledge, most stolen art goods make their way to Southeast Asia, in countries like Indonesia, Thailand, or Singapore, before being distributed back to major art-trading centers like the U.S., Europe, China, and the Gulf States. Of particular concern to experts like Daniels is increasing cooperation between organized crime in Western countries and terrorist-linked smugglers. He noted an uptick in looting of archeological sites in Libya, which are then transferred to Europe through powerful organized crime syndicates like the ‘Ndrangheta in Southern Italy. The ‘Ndrangheta, or the Calabrian cousin of the Sicilian mafia, is the primary supplier of hard drugs like cocaine and heroin to most of continental Europe. The difficulty for art dealers is that without proper documentation explaining an object’s provenance, it is often extremely difficult to tell whether an object is being sold legally or illegally. 

So they handle it anyway. It seems that here is the crux of the matter. Dealers habitually ignore the risk (with no threat to their 'reputation'), instead of being sensitive to it. They cannot be bothered to obtain documentation of licit origins, as it is irrelevant to their purpose.

Further complicating the situation is a culture of secrecy that pervades the art world, which has, by tradition, awarded extraordinary privacy to buyers and sellers trading artworks at auction. Top auction houses, like Sotheby’s in the 1990’s,  have been accused of turning a blind eye to illegally stolen artworks and artifacts in order to pocket healthy commission fees. 

Law enforcement official Raymond Villanueva of the Homeland Security Department was another witness on the panel and 'highlighted a joint operation, Hidden Idols, which recently took down an art-crime ring in New York that was attempting to sell artifacts at Christie’s. Hmm, that's not the entire truth. The US only started an investigation into the gallery involved, operating openly under their noses for two decades, when the US dealer was arrested in Germany (reportedly after a tip-off by a jilted ex-girlfriend) and extradited to India, forcing the hand of the US authorities.

The panel also touched at times on instances of domestic art smuggling—in particular from traditional Native American burial grounds. Like the international crime rings, the experts indicated that they believe that the domestic illegal art trade is also often linked to organized drug trafficking, particularly in methamphetamine. 

The key point:

Unless they receive far more serious cooperation from the art community, the experts did not seem particularly optimistic that the illegal trade will be significantly curtailed in the near future.

And there would be no incentive for that collaboration if dealers and collectors had good grounds for a fear that is illicit sources were excluded, the market would cease to expand and dry up. Do they?