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Art part of the picture when it comes to money laundering

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After 40 years in the art trade James O’Halloran has seen pretty much everything. But one thing he has not encountered lately is a customer trying to buy a work of art with a wad of banknotes, a sign that the money may be the proceeds of crime.

“It’s a long, long time since I’ve seen anybody bringing in cash of any consequence,” says O’Halloran, the managing director of Adam’s auctioneers in Dublin.

Dealers in fine art are always on guard against the theft of paintings, sculptures and antiquities. Now, however, hundreds of art traders, galleries and intermediaries have been warned to take measures against gangsters buying expensive artwork to launder money from drugs, conspiracies or terrorism.

This is the local part of an international drive to close off routes for criminals to use the private world of art dealing to shelter illicit funds.

Sales in Irish art are estimated to be worth about €50 million per year, significant but small compared with global markets dominated by the US, UK and China. A report by Art Basel, which organises sales, and UBS bank estimates the world market was worth some $50.1 billion (€44.1bn) in 2020.

Such transactions are coming under increasing supervision as anti-money laundering rules developed for the banking system are extended to cover art trades that had little public scrutiny for generations and thrived on anonymity.

In line with an EU directive, new laws took force here last April to sharpen regulation of the high-value art market. As the regime beds down, the Department of Justice plans to intensify inspections of traders and intermediaries.

Officials in the department’s anti-money laundering unit have identified some 234 businesses trading in art. After authorised officers visited 10 dealers in the final quarter of last year, they plan twice as many inspections this year.

”In 2022 the unit will carry out a review of all art trader and art intermediary inspection findings to better understand and assess the risks in this sector,” the department said. “When these risk become more apparent ongoing compliance inspections will be carried out using a risk-based approach, with inspections focused on those entities presenting a higher money laundering and terrorist financing risk.”

Public oversight

For some in the polite world of art dealing, intrusive public oversight is already a fact a life. Auction houses, for example, cannot operate without a licence from the Property Services Regulatory Authority, a State body whose anti-money laundering powers include the right to carry out investigations and regular audits. But the new regime – stemming from the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 – covers art dealers and galleries that are not subject to PSRA supervision.

“It’s drawing more people into the net,” says O’Halloran, whose business is already overseen by the PSRA.

“The requirements are becoming more onerous.”

Art has long been used in international crime to bring illicit money into the legitimate economy via a process known as layering, which is the distancing of illegal funds from their source. Such objectives can be achieved by adding layers of transactions involving a work of art to cut links with the original crime and to thwart the audit trail.

Two factors help criminals to shelter money via art and move wealth around. First, high valuations mean individual works can fetch millions of euro. Second, the fact that the art market often operates in secret provides openings.

American criminals have dealt in work by Pierre-Auguste Renoir, Pablo Picasso and Salvador Dalí – and Russian oligarchs targeted by sanctions over the annexation of Crimea have been accused of using high-value art transactions to evade penalties.

The art market has been cast as the “largest, legal unregulated industry” by Washington politicians.

“Secrecy, anonymity, and a lack of regulation create an environment ripe for laundering money and evading sanctions,” said a report in 2020 by the US Senate permanent subcommittee on investigations. “Tracing the ownership of anonymous shell companies, including those involved in high-value art transactions, is difficult.”

Irish criminals are as violent and unscrupulous as bloodthirsty gangsters elsewhere – and four art robberies over decades from Russborough House, Co Wicklow, show that valuable paintings can be vulnerable to theft. Gardaí say, however, that art is less likely to be used in Ireland to launder money than cars, houses and jewellery.

“I’m not aware of us ever seizing that sort of asset. But look, you can be damn sure they’re doing it. But it hasn’t come on our radar,” says a senior Garda source.

Obligations

Still, Irish art dealers have been put on notice that that stringent new laws now apply and that they must take measures to ensure their business is not being used by criminals with tainted cash.

Justice officials made contact in November with businesses covered by the regime, inviting them to a December webinar in which they were told of mandatory obligations to report any suspicious transactions to the Garda financial intelligence unit and the Revenue. These include “unusually large” deals or “unusual patterns of transactions which seem to have no apparent or obvious economic or lawful purpose”.

Clodagh White, detective sergeant with the financial intelligence unit, told the webinar that drug cartels and organised crime groups use art and antiquities to finance themselves.

“We’re talking about high-value goods, high-value pieces of art which are very tangible, that can be easily sold and transported across borders,” she said on the webinar.

“This is all part of the layering process and the laundering process where they’re converting the proceeds of crime – which in some cases may be cash – into an asset which can then be sold on, and it’s all about infiltrating the legal economy and making it look as if these pieces of art were purchased with legitimate funds.”

O’Halloran said the requirements under the new regime are serious.

“Even if you were naïve and you found yourself on the wrong side of a report about something that happened in relation to [the Criminal Assets Bureau] discovering things, that’s not the kind of thing that lends a huge amount of confidence to an outfit in the outer world,” he says.

“Ultimately the legitimate business doesn’t want to have anything to do with people who are even considered suspiciously. You just don’t want to know: ‘I’m not doing time for you’.”

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External investigation into Department ‘champagne party’ needed – Minister

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Minister of State Anne Rabbitte has called for an external investigation into a “champagne party” held by staff in the Department of Foreign Affairs staff in June 2020.

The gathering, which appeared to breach Covid-19 guidance in place at the time, was “inexcusable” and Minister Simon Coveney and his department have further questions to answer, the Fianna Fáil TD told Saturday with Katie Hannon on RTÉ Radio One.

“Having a champagne reception in any government department at that time, I know over in the Department of Health where they worked tirelessly for 23, 24 hours a day, it was far from champagne they were having,” she said.

Ms Rabbitte said an internal report conducted by the department’s current secretary general was not a satisfactory way to handle the matter.

“It’s still within the same department, and we know the answer we will get. I would be one for openness and transparency … it has to be [an external report].”

She added that all departments needed to learn from the mistake.

Officials were photographed in the department celebrating Ireland’s election onto the UN Security Council, and the image was posted on Twitter by the then secretary general Niall Burgess. The tweet was later deleted. At the time of the event, there were strict restrictions on the size of gatherings due to Covid-19.

Speaking on the same programme, Labour TD Duncan Smith said people were angered at the event because June 2020 was a bleak time for most people in Ireland. He said the public had seen other incidents where politicians and others were accused of breaching Covid-19 restrictions.

“These are the elites of society … what has really hurt people is that it really got to the ‘we are all in this together’ philosophy.”

Sinn Féin TD David Cullinane agreed there needed to be an independent review of the matter, adding that Mr Coveney needed to come before an Oireachtas committee and the Dáil to gave a “frank and full account” of what happened.

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Dog-owners bite back at beach rules

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Following a series of reports that An Taisce is leading the battle to ban dogs from the State’s 83 blue-flag beaches, the organisation’s Ian Diamond is feeling misunderstood.

“I don’t hate dogs”, Mr Diamond says, pointing out that Blue Flag International – the global body which governs the coveted awards – warned last year that some qualifying beaches were not honouring long-standing rules.

Under what’s known as Criterion 23, the rules declare that beach access “by dogs and other domestic animals must be strictly controlled” and that they be allowed only in “the parking areas, walkways and promenades in the inland beach areas”.

Faced with the reminder, Mr Diamond said he requested last year that local authorities get more time, as it was “not something that can be introduced immediately in the middle of a pandemic when people are under other restrictions.

“You can’t exactly introduce these things overnight, so we were flagging that,” he said, adding that Blue Flag told them to speak to people seeking blue flag status and “come back with proposals” that comply with the rule.

The issue came to national attention following a meeting of Kerry County Council this week, though it was understood then that the rule was an An Taisce demand, rather than being a Blue Flag International obligation.

Dogs and horses

Consequently, Kerry County Council now propose that dogs or horses will not be allowed on blue-flag beaches from 11am-7pm between June 1st and September 15th, or otherwise the county could lose its 14 blue flags.

However, the restrictions are unpopular with some dog-owners: “There’s a lot more important things to be worrying about than dogs on a beach,” said David Walsh, as he walked his pet, Oreo, on Salthill beach.

Dog-owners in Salthill are already not allowed to bring their dogs onto the beach between 9am and 8pm between May 1st and September 30th each year, in line with Blue Flag International’s rules, though penalties are rare.

Mr Diamond says a national application of the rules at blue-flag beaches would not “strictly prohibit dogs being on the beach” during bathing season, outside of peak hours.

Bathing season

“The blue-flag criteria would apply from June 1st to September 15th, within peak usage hours, so bathing hours – that would be mid-morning to early evening,” said the An Taisce officer.

“What it requires is that there would be rules in place in relation to dogs that say [they] should not be in the blue-flag area within those hours and within the bathing season,” Mr Diamond said.

The restriction is based on public health grounds and dates back to 2003: “Dog faeces actually contain a lot of the micro-organisms that cause illness in the same way that human waste would,” he said.

“There’s no zero-tolerance approach to this. If rules are going to be brought in, then people will be consulted as well, you know, brought in unilaterally, and it’s down to the councils responsible for the beaches to bring those in.”

Not everyone disagrees with An Taisce, or Blue Flag: “I don’t think dogs should be on the beach, because of the kids and all that. And a lot of people don’t pick up their poo afterwards,” said a man on Salthill beach.

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Jail for banned motorist from Limerick caught driving on Christmas shopping trip to Belfast

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A banned motorist from Limerick caught driving on a Christmas shopping trip to Belfast has been jailed for seven months.

Police also discovered three of Leeanne McCarthy’s children not wearing seat belts when her car was stopped on the Westlink dual carriageway.

The 41-year-old mother-of-eight initially gave officers a false identity, prosecutors said.

Belfast Magistrates’ Court heard a PSNI patrol car stopped the Ford Focus on November 26th last year.

McCarthy, with an address at Clonlough in Limerick, provided a different name and claimed she did not have her licence with her.

However, checks revealed that a month earlier she had been banned from driving for five years.

A Crown lawyer said: “Three young children were in the rear of the vehicle, none of them wearing seat belts.”

McCarthy initially claimed they only removed the safety restraints when the car came to a halt, the court heard.

Police were told that she took over driving duties from another daughter who had been tired and nearly crashed the vehicle.

McCarthy was convicted of driving while disqualified, having no insurance, obstructing police and three counts of carrying a child in the rear of a vehicle without a seat belt.

Her barrister, Turlough Madden, said she had travelled to Belfast for Christmas shopping.

Counsel told the court McCarthy spent the festive period in custody, missing out on sharing it with her eight children and four grandchildren.

“That’s been a wake-up call and significant punishment for her,” Mr Madden submitted.

“She is a mother who simply wants to go back to Limerick and not return to Northern Ireland.”

Sentencing McCarthy to five months imprisonment for the new offences, District Judge George Conner imposed a further two months by activating a previous suspended term.

Mr Conner also affirmed the five-year disqualification period and fined her £300 (€350) for the seat belt charges.

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