US prosecutors questioned the legality of selling paintings to Russian oligarchs

US prosecutors have launched an investigation into the legality of the acquisition of works of art by Russian oligarchs through major auction houses, writes Bloomberg. citing a source familiar with the investigation.

Federal prosecutors in New York asked auction houses for several years of data. Billionaires Andrei Melnichenko, Viktor Vekselberg, Roman Abramovich and Ukrainian oligarch Igor Kolomoisky appear in their requests.

In particular, prosecutors want to know all the details of auction houses’ transactions with these entrepreneurs. Such demands are the result of increased cooperation between the Treasury Department’s Office of Foreign Assets Control (OFAC) and Ministry of Justice prosecutors who fight money laundering, explained art crimes attorney George Lederman.

According to him, as a result of the sanctions imposed on Russia, “cases of prosecution for money laundering have increased.” Prosecutors are now focusing on specific works of art that were purchased many years ago, as well as several properties, a source familiar with the investigation explained.

The investigation is being led by the Southern District of New York Attorney General’s Office and the federal task force KleptoCapture, which was set up to enforce sanctions and find assets to freeze.

Major auction houses and private art dealers make it a standard clause in their contracts that buyers or sellers will not be punished or engaged in criminal activity, says New York lawyer Thomas Danziger. Such a clause appeared in 2020 after the Senate report on evading sanctions by trading in works of art.

“Putin’s banker is unlikely to walk into a gallery on Madison Avenue and buy a Picasso,” says Danziger. At Christie’s International in response to a request from Bloomberg he asserted that the house “cooperates and fully complies with law enforcement when required of us.” At Sotheby’s they also stated that they were cooperating with the authorities within the law.

at the Phillips auction house announced that they have taken all measures “to ensure that no sanctioned person or entity can conduct business directly or indirectly through our markets”.