Luxury goods dealers do too little to limit sales to the corrupt
April 2nd, 2017
April 2nd, 2017
Berlin, 3 April 2017 – Luxury goods sellers – from jewellers and real estate agents to yacht builders and diamond brokers – are doing little to check if their customers are using corrupt money to fund their high-end purchases.
This is the conclusion of a new report, Tainted Treasures: Money laundering risks in luxury markets, from the anti-corruption movement Transparency International, which found that little due diligence is done on luxury goods buyers and where there are laws, there is little enforcement.
Transparency International is calling for governments in high risk countries, including China, Japan, the US and the UK, to introduce specific laws to mandate due diligence for high-risk luxury goods sales and establish a designated authority to enforce them.
“For the corrupt, the luxury sector is more than just a money laundering vehicle. The behaviour of kleptocrats who amass millions in properties, sports cars, and art in a short period of time shows that the desire to own luxury can in fact be one of the drivers of corrupt behaviour. The luxury sector has a responsibility to prevent public funds, which could have gone to schools and hospitals, from being splurged on their products even if it means fewer sales,” said Transparency International Chair José Ugaz.
The most recent due diligence data shows a pattern of lax reporting. For example:
The red flags that point to a risk of money laundering include the widespread use of anonymous shell companies to disguise the ultimate owner of assets in addition to long-standing luxury industry traditions of discretion and confidentiality. Sectors such as precious jewels or luxury accessories also feature high-value goods that are easily transportable, yet anti-money-laundering measures are scant.
Despite these risks, there are limited anti-money obligations in leading luxury markets such as China, Japan and the US. In countries where anti-money laundering legislation at least partially applies to luxury dealers, such as France, Germany, Italy and the UK, there is little evidence of effective enforcement of these rules by authorities.
The report makes the following recommendations to address risks of dirty money being used to buy luxury goods and assets:
Click here to download the full report.
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