HEZBOLLAH-LINKED ART RAISES RED FLAG TO AUTHORITIES IN UK
▶ Fears grow that art storage centres could be used by criminals to hide wealth, writes Tariq Tahir in London
When police swooped on a high-security warehouse near London’s Heathrow Airport, officers took away nearly two dozen works of art belonging to alleged Hezbollah financier Nazem Ahmad.
At the same time, at an auction house in central London, they seized art that Mr Ahmad, a Beirut art gallery owner who the US wants to put on trial, hoped to sell.
The seized works included Picasso’s 1962 linocut Nature morte a la pasteque (Still Life with Watermelons) and several by Andy Warhol, including Details of Renaissance Paintings (Leonardo da Vinci, The Annunciation, 1472).
A Stanley Whitney painting, Sing All Day, worth £225,000 ($315,000) and Iranian artist Ali Banisadr’s painting Divine Wind, valued at £175,000, were the two most valuable works taken by officers.
Police believe the sale of all the works seized – valued at about £1 million – was probably to have funded crime or terrorism.
The investigation narrowed in on the world of art storage, which legitimate business authorities believe may be exploited by terrorists, sanctions evaders and criminals trying to hide their assets.
With the price of art soaring and the ease with which it can be taken across borders and hidden from view, it is increasingly becoming the commodity criminals want. Art is often stashed for years, away from prying eyes.
Alarm bells have been ringing for years for global experts who spoke to The National about their concerns.
Law enforcement has now sent an “unprecedented shot across the bows” for the industry to be proactive in identifying culprits.
Britain’s National Crime Agency has issued an “amber alert” to art storage centres to raise red flags over their use for money laundering, tax evasion, terrorist financing, bribery and corruption.
The agency refers to an investigation into a “sanctioned Hezbollah financier which identified approximately a million pounds sterling in fine artwork belonging to this individual in art storage facilities in the UK”.
Adrian Searle, director of the National Economic Crime Centre at the agency, has said the sector must “increase its vigilance and embrace their role as the gatekeeper of the legitimate art market”.
US authorities have offered a $10 million reward for information about Mr Ahmad, 59, who is understood to be living in Beirut.
The Lebanese art dealer and diamond smuggler, who is alleged to be financing Hezbollah, was first accused by the US Department of the Treasury in 2019 of laundering “substantial” amounts of money and being involved in the smuggling of “blood diamonds” for Hezbollah, which the US has designated as a terrorist organisation and hit with sanctions.
Sanctions were imposed on Mr Ahmad and in April last year the US charged him, along with eight associates, including his UK-based right-hand man Sundar Nagarajan, with offences relating to breaching sanctions regulations.
Mr Nagarajan was extradited to the US in December.
The British government also imposed sanctions on Mr Ahmad, saying he had an extensive art collection in Britain and conducted business with several UK-based artists, art galleries and auction houses.
A month later came the Metropolitan Police action in which, under a warrant, 23 paintings he owned were seized at a warehouse of art storage company Williams & Hill in Feltham, near Heathrow airport.
A further nine works were seized at Phillips auction house in London, where Mr Ahmad had sent them to be sold. A forfeiture order was issued in October.
Phillips told The National it had co-operated fully with the authorities in the US and Britain.
In a statement, it said: “On becoming aware of the allegations and the action taken by the US authorities, Phillips immediately ensured that Mr Ahmad was banned from transacting with us and froze all artworks belonging to Mr Ahmad in our possession globally at that time.
“In February 2020, Phillips provided a full list to the US Department of Justice of all properties held by us belonging to Mr Ahmad.
“When the UK police subsequently requested to take possession of the property belonging to Mr Ahmad, Phillips fully and promptly complied.”
Williams & Hill has three large centres holding artwork for shipping, or longterm storage.
The company offers a “custom-designed facility” spanning 32,000 square metres with the “latest in high-security storage” that is
“fully climatecontrolled”.
There is no suggestion that Williams & Hill has committed any criminal offence.
The company declined to issue a comment when approached by The National.
London’s Met Police told The National that officers from the National Terrorist Financing Investigation Unit were investigating “suspected terrorist financing and money laundering which is believed to be connected to wealthy art collector and diamond dealer, Nazem Ahmad”.
“Ahmad is suspected of being a funding source for Hezbollah, a proscribed terrorist organisation,” the force said.
“Terrorist groups rely on financial support and funding for their activities, and the NTFIU works closely with agencies in the UK and around the world to identify and take action against those who provide and facilitate this funding.”
Although storage owners “ceased dealing with the subject” and the artwork had been left for more than a year, the “companies involved had not notified the authorities of what they were holding, or for whom”, the British crime agency said.
The case “highlights the risk of art storage facilities as a mechanism for long-term storage and concealment of high-value assets by sanctioned persons”, it said.
The activity of money launderers and sanctions evaders mirrors the tactics used by terrorists.
The agency’s alert comes after the Financial Action Task Force, an intergovernmental organisation aimed at tackling money laundering, including terrorist financing, issued a similar warning last year.
Rick St Hilaire, a cultural heritage lawyer in New Hampshire and a former chief prosecutor, said: “It’s a growing concern to law enforcement, and for those of us practising in this sector, we’ve known about this for a long time.”
Mr St Hilaire said the organised structure that ISIS had in place for the export and sale of looted antiquities indicated that the terrorist group had a governing department to supervise, tax and ensure these cultural heritage objects went to market.
“I am particularly concerned about how terrorist networks and organised crime might use a warehouse to hide goods,” he told The National.
“It’s been on my mind now for many years, though much of the evidence we have in private industry is anecdotal.
“Law enforcement likely has more.
“You know their transactions have to run through normal shipping routes.
“They have to get goods from point A to point B and it’s got to go through some place and that’s what raises, in my mind, the use of warehouses and freeports.”
The task force report says that while ISIS has lost all the territory it once controlled, the group has affiliates around the world, meaning it may still have access to cultural heritage sites or possess artefacts that could generate funds.
Other terrorist groups, including Al Qaeda and its affiliates, have used similar schemes in the Middle East, North Africa and certain parts of Asia.
In some cases, transnational organised crime groups have co-operated with terrorist groups to acquire such items and smuggle them out of conflict areas.
Businesses working in these markets, such as art dealers and advisers, auction houses and storage facilities, face a variety of risks, the task force has warned.
Mr St Hilaire made references to the uncovering of the activities of Italian antiquities smuggler Giacomo Medici as a clue that others could be using storage facilities for the trade in antiquities and artwork.
Medici used storage in the Geneva freeport to conceal his illicit trade, for which he was given a 10-year jail sentence and €10 million ($10.7 million) fine in 2004.
“That’s a textbook illustration of warehouses used in this way,” Mr St Hilaire said.
“So why wouldn’t I think they’re being used by terrorists
and organised crime in the same fashion?”
While Britain is moving to deal with the threat posed by criminals using art storage, authorities in Switzerland have been taking action since the country’s police first raided Medici’s warehouse in the Geneva freeport in 1995.
It introduced a six-month time limit on the storage of goods intended for export and the identity of the buyer of the goods to be exported to the country’s freeports must be declared.
Mr St Hilaire welcomes Switzerland’s commitment to dealing with the problems.
“If you look back at the situation in 1995, now is a very different time when Swiss authorities have finally said, ‘We’re tired of this, we don’t want criminals to come to Switzerland,’” he said.
Rena Neville, an expert on money laundering and the art market, described the British agency’s notice as unprecedented and “a shot across the bow of the art market, and in particular shippers and storage facilities”.
The agency’s warning covers warehouses, auction houses, art dealerships, galleries, museums and freeports, which also offer services including insurance, inventory management, customs bonding, private viewing rooms and office and boardroom facilities.
Ms Neville, head of the art division at the FCS Compliance consultancy and a lawyer who previously had a 30-year career at auction house Sotheby’s, said the notice issued by the NCA was “unusually targeted and specific”.
From 2020, anyone dealing in works worth €10,000 or more has been subjected to several obligations, including reporting suspicious transactions to the authorities and carrying out due diligence on customers before they conclude a transaction.
“The feedback I’ve been getting from government is that since the art market sector became regulated in January 2020, we are submitting many fewer suspicious activity reports than other regulated sectors and many fewer than they would expect from us,” Ms Neville said.
So far Mr Ahmad’s case is unique in linking terrorism, money laundering and art storage, she said.
But “everybody that I know everywhere in the world in law enforcement really believes
this is happening and says they see it”, she added.
Rather than masterpieces, the work traded is more likely to be in the “middle and lower end of the market” to avoid attracting attention and “most artwork” sells for “under £100,000”, she said.
While two of the works seized from Mr Ahmad are valued in six figures, most are under £10,000, according to the full list provided to
The National.
Another Warhol work that was seized, Flowers, is valued at £15,000, and Edouard Vuillard Deux Ouvrieres Dans L’atelier De Couture, by Julio Anaya Cabanding, is valued at £1,200.
Running art warehouses is difficult because of the opaque nature of many deals, said lawyer Angelika Hellweger.
It is understood artwork is rarely bought using the new owner’s real name.
Cash deals sealed by handshakes are not uncommon, nor are sales through a shell company or trust.
Dr Hellweger, an art crime, sanctions and money laundering specialist, and legal director at London firm Rahman Ravelli, said she prepared a briefing note for her clients on the alert issued by the UK agency.
“This is obviously a warning shot to everyone having some type of storage facility that when they are holding suspicious things, that they actively reach out to authorities,” she told The National.
“Art is movable and hideable as an asset, compared to say property or a yacht. So when a painting is stored, nobody really knows that it’s there.”
Dr Hellweger explained that due to efforts to crack down on concealing the beneficial owners of properties, highworth individuals turned to artworks to conceal their assets, using the same opaque ownership structures.
“It’s now much easier to find out the owner of a huge property or a very expensive home, even if it’s held by intermediaries,” she said.
But that is not the case with art. “First and foremost, they will not openly buy one in their own name,” she said.
“They buy through a chain of people who don’t really know each other.
“Also, if I am the buyer, I do discreet research via other people, because if they find out who I am, that can push the price up.” Criminals test warehouses’ due diligence processes by conducting legitimate business activity, before switching to illicit items, the UK agency has warned.
They may request sudden service changes to conceal and move assets that may be proceeds of crime or subject to sanctions.
“They might say they want the temperature at a certain level, which is a sign they are moving artwork in to be stored,” Dr Hellweger said.
Storage centres should be alert to attempts to transfer ownership of art to a family member, close contact, business associate or other intermediary, as well as to sell artwork or move it quickly, the agency said.
Daily updated lists of people under sanctions should also be checked, it said.
“Often, when it comes to corruption or to money laundering, you have the problem that these people are doing normal business as well,” Dr Hellweger said.
“But often the art has been stored for many years and there’s not even a register of what is in the storage rooms. They will often not really know what’s there.”