4 ms·

IDK how this works. Are these auctions settled in cash, with no link to the banking sector? Wouldn't the _buyer_ be automatically suspect? It feels like the mo

IDK how this works. Are these auctions settled in cash, with no link to the banking sector? Wouldn't the _buyer_ be automatically suspect? It feels like the more likely play would be just plain old fraud. With an accomplice, shill bid your item from 200 bucks to 1.56 million, and hope someone else decides that auction was legit enough to buy off you; even if it comes in 10 below previous auction, it's a coup. Or if it is stolen or damaged in a fire, insurance would be able to help make you whole.

alexeldeib 5y ago
While I agree with you on the practical difficulties, the reason it's so clever is right in OP's comment: "there’s a huge amount of plausible deniability in someone’s honest willingness to pay such an exorbitant sum." That rings true for me -- think of any collectible and the prices people are willing to pay. At the extreme: large sums for things most people find totally irrational. Who are you to tell a high bidder that you don't believe they are genuinely interested, when you know nothing about them other than the bid?
- jldugger 5y ago
  Technically, you'd need two bidders if this is an open auction, or you'd also have to explain why you outbid second place by so much. And to answer my own question: apparently it's not required for auction houses to vet buyers, and this has been discovered by russian oligarchs evading US sanctions. Congress passed a law on Jan 1 to make that illegal -- overriding Trump's veto, naturally. It specifically mentioned 'antiquities' so presumably people are testing the waters elsewhere.
  - antihipocrat 5y ago
    I was confused as to how the buyer would escape scrutiny as well.. So the answer is that if the buyer isn't vetted, then the seller could pretend to be multiple buyers and bid up the price to the desired amount. The settlement would then be made (or at least documented as being made) in cash.
vmception 5y ago
The mere existence of a third party being able to look at financial data doesn't automatically make you vulnerable, so having convoluted additional third parties like insurers pay out with “clean money” isnt necessary, nor is absolute anonymity to banks or government necessary. Just because there could be a bank or lawyer or someone that can see where the money came from doesn't mean that you can't successfully pass muster. Protip: A federal money laundering conviction requires an illicit origin. Successful money laundering never has an illicit origin. Therefore, money laundering charges can only be tacked on retroactively, in addition to another charge based on an illegal action that occurred. And simply having or moving money is not probable cause. But obviously people can mess this up if they really didn't bother covering their tracks. But if they actually laundered it already then no.
- gowld 5y ago
  > And simply having or moving money is not probable cause. What do you mean? AML laws specifically call for investigating suspicious transactions.
  - vmception 5y ago
    They require banks to file notices of some transactions from non-KYC’d sources But not from sources they’ve assumed to be KYC’d The notice merely gives the government paperwork to make their job easier if an investigation begins. It doesn’t begin the investigation.
octodog 5y ago
Typically the sale of luxury goods is part of the integration phase in ML. This is when the money is finally transferred back to the criminal and so it is important to be within the financial sector. It presents a very straightforward way to legally transfer a large sum of money to the criminal (the seller). Having said that, I'd imagine you'd want to avoid media attention so transactions like this seem unlikely to be ML to me.

alexeldeib 5y ago

While I agree with you on the practical difficulties, the reason it's so clever is right in OP's comment: "there’s a huge amount of plausible deniability in someone’s honest willingness to pay such an exorbitant sum." That rings true for me -- think of any collectible and the prices people are willing to pay. At the extreme: large sums for things most people find totally irrational. Who are you to tell a high bidder that you don't believe they are genuinely interested, when you know nothing about them other than the bid?

jldugger 5y ago
Technically, you'd need two bidders if this is an open auction, or you'd also have to explain why you outbid second place by so much. And to answer my own question: apparently it's not required for auction houses to vet buyers, and this has been discovered by russian oligarchs evading US sanctions. Congress passed a law on Jan 1 to make that illegal -- overriding Trump's veto, naturally. It specifically mentioned 'antiquities' so presumably people are testing the waters elsewhere.
- antihipocrat 5y ago
  I was confused as to how the buyer would escape scrutiny as well.. So the answer is that if the buyer isn't vetted, then the seller could pretend to be multiple buyers and bid up the price to the desired amount. The settlement would then be made (or at least documented as being made) in cash.

vmception 5y ago

The mere existence of a third party being able to look at financial data doesn't automatically make you vulnerable, so having convoluted additional third parties like insurers pay out with “clean money” isnt necessary, nor is absolute anonymity to banks or government necessary. Just because there could be a bank or lawyer or someone that can see where the money came from doesn't mean that you can't successfully pass muster. Protip: A federal money laundering conviction requires an illicit origin. Successful money laundering never has an illicit origin. Therefore, money laundering charges can only be tacked on retroactively, in addition to another charge based on an illegal action that occurred. And simply having or moving money is not probable cause. But obviously people can mess this up if they really didn't bother covering their tracks. But if they actually laundered it already then no.

gowld 5y ago
> And simply having or moving money is not probable cause. What do you mean? AML laws specifically call for investigating suspicious transactions.
- vmception 5y ago
  They require banks to file notices of some transactions from non-KYC’d sources But not from sources they’ve assumed to be KYC’d The notice merely gives the government paperwork to make their job easier if an investigation begins. It doesn’t begin the investigation.

octodog 5y ago

Typically the sale of luxury goods is part of the integration phase in ML. This is when the money is finally transferred back to the criminal and so it is important to be within the financial sector. It presents a very straightforward way to legally transfer a large sum of money to the criminal (the seller). Having said that, I'd imagine you'd want to avoid media attention so transactions like this seem unlikely to be ML to me.