Auction Houses Will Comply With International Inquiry Into Sanctioned Russian Oligarchs’ Assets

Christie’s, Sotheby’s, and Phillips, the top three auction houses in the world, will comply with ongoing international efforts targeting assets owned by sanctioned Russian business moguls.

On Wednesday, the U.S. Treasury Department released details about an international task force it said will target “high-value” and “luxury” assets owned by blacklisted Russians with links to President Vladimir Putin. Bankers, energy barons, and politicians will be among those subject to investigation by the task force, which is known as Russian Elites, Proxies, and Oligarchs (REPO).

Those involved with the task force are likely to investigate the assets of various art collectors who are sanctioned in the U.S., the U.K., and the E.U., including Roman Abramovich, Mikhail Fridman, Alisher Usmanov, and members of the Rotenberg family.

Spokespersons for Christie’s, Sotheby’s, and Phillips said the companies will comply with potential law enforcement probes. Sanctions already bar the houses from transacting with blacklisted Russians and their affiliates abroad.

“We are absolutely rigorous about following the present sanctions, and are monitoring closely for any updates to the lists,” a spokesperson for Sotheby’s said in a statement.

A spokesperson at Christie’s said the house abides by “strict client identification and screening processes,” and that “politically exposed persons, and those with a connection to a sanctioned or other high risk jurisdictions, are subject to enhanced due diligence.”

In lockstep with other major firms in the West operating offices in Russia, Christie’s and Sotheby’s have temporarily closed their Moscow offices. Those spaces are relatively small operations, with three or fewer employees manning them in both cases. Phillips is still maintaining its Moscow satellite with administrative staffers; no business transactions are run through the office. Christie’s and Sotheby’s also recently canceled sales of Russian art in response to the escalating conflict.

REPO’s inquiry has already led to the seizure of superyachts from Russian oligarchs. U.S. Attorney General Merrick Garland said officials are determining whether assets linked to sanctioned individuals or entities directly and indirectly “are subject to forfeiture.” (Russian figures have lost an estimated $83 billion since the invasion into Ukraine, accounting for roughly a third of oligarchs’ collective wealth, CNBC reported.)

According to the Treasury Department, REPO is also eying “enablers and gatekeepers who have facilitated the movement of sanctioned assets or other illicit funds.” The move raises questions about how art businesses that deal internationally and hold proprietary information on accounts linked to sanctioned individuals will be affected by the probe.

Whether auction houses could be impacted by economic sanctions related to the war remains unclear. Industry experts have pointed out Russian oligarchs are less powerful in the art market than they once were, accounting for fewer transactions overall following the rise of the Hong Kong market around 2015. Spokespersons for Christie’s and Phillips both said that clients in Russia accounted for 1 percent of each house’s respective total sales in 2021. (These figures don’t account for advisers and affiliates transacting on behalf of Russian clients based outside of the country.)

There are still looming economic consequences that could affect top auction houses, which have spent the last year expanding their footholds in the Asia-Pacific region. China remains a key partner to Russia, trading an estimated $147 billion annually. Chinese firms could still be subject to secondary sanctions that may place stress on the country’s financial network.