Russian Art Week, the go-to art fair for wealthy Russian buyers, was canceled in London.
Potanin resigned from the board of trustees at the Guggenheim Museum.
Artists are canceling their exhibits at the Garage museum in Moscow, founded by a former wife of a Russian billionaire.
The notoriously opaque art industry is attempting to cut off decades-long relationships with the foreign tycoons as the world looks to retaliate against the Russian government.
The $50 billion art industry faces "gaping holes" when it comes to the question of ownership, according to experts.
The European Union and the UK have sanctions against Mikhail Fridman, who bought Andy Warhol's Four Marilyns for $38.2 million. He sold it to a Turkish bank for $44 million the next year.
Roman Abramovich, who is also on the EU and UK sanctions lists, has purchased works by Lucian Freud and Francis Bacon.
According to the New York Post, the founder of the Gagosian gallery in New York has been called the official art dealer to the Russian billionaire. The gallery said it has established effective internal controls and undertakes due diligence measures to fully comply with all relevant laws, when asked if the client relationships will change in light of recent sanctions.
The US, Canada, and Western European countries formed a task force to freeze assets held by Russian power elites in other countries.
In order to freeze an asset, you need to prove who it is, in the art world where anonymous and concealed purchases are commonplace.
The global art market is one of the least transparent parts of the financial system.
A bipartisan Senate investigation in 2020 found that after the US imposed sanctions on Russian businessmen in March of 2014, shell companies linked to them bought more than $18 million in high-value art in the US.
The US Treasury's Financial Crimes Enforcement Network sent out an alert about the attractiveness of the high-value art market to money launderers, including Russian elites.
The art world is vulnerable to this practice of "washing" illegally obtained money so that it appears to come from legitimate sources.
It is difficult to identify the actual buyer, says Dr. Ruehsen, director of the Financial Crime Management Program at the Middlebury Institute of International Studies at Monterey.
No one will purchase anything under their real name. Ruehsen told Insider that someone who has nothing to hide is getting purchased by a trust or a shell company.
Most art is easier to hide than other assets, like private jets, which have been seized from Russian billionaires in recent weeks.
Free economic zones and large warehouses called freeports are where high-end pieces are often stored. It is possible to buy and sell artwork without ever leaving freeports, allowing it to remain hidden as governments search the assets of individuals who have been sanctioned. Sanctioned elites can try to shield art from seizure by transferring ownership on paper to a trusted associate.
Private owners can inflate prices by millions of dollars if they have a more subjective market price.
Ruehsen said it was hard to argue over the true value of the product.
Auction houses say they are prepared to remove individuals from their client lists.
According to Insider, the company conducts business in strict compliance with all applicable laws and regulations, and will comply with any regulations put in place.
Christie's said it has immediately taken actions through its strict client identification and screening processes in place as part of its global anti-money laundering and sanctions compliance programmes.
The company said that they are not permitting individuals or companies who are designated on applicable sanctions lists to transact with them.
The company has measures in place to ensure that no individual or institution targeted by sanctions are able to do business directly or indirectly through our salerooms.
Paul Minshull, the COO and CTO at Heritage Auctions, said the company has had anti-money laundering policies in place for several years.
The galleries have a lot of insight.
The real estate market has a problem with open records of beneficial ownership. It is a problem in our financial system.
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