A Landmark Sanctions Case Is Now Testing the Art Market

HMRC has launched one of its most significant sanctions prosecutions to date, and it centres on a blue-chip gallery, a George Condo painting (painting or work on paper), and the post-invasion bans in the UK, imposed following Russia’s invasion of Ukraine. Hauser & Wirth has been charged with allegedly making Escape from Humanity available to Moscow-based collector Alexander Popov between April and December 2022.

Popov is not sanctioned and not accused of wrongdoing, yet the case is proceeding because UK rules prohibit shipping luxury goods worth over £250 to individuals in Russia. Transactions with parties connected to Russia are also precluded. Connected is understood to mean “ordinarily residing” in Russia.

HMRC is leading the investigation and believes this is the first prosecution under this specific luxury-goods restriction. A related art shipping company has also been charged. Both intend to plead not guilty.

A pre-trial hearing is scheduled at Southwark Crown Court in December.

Why this matters for the art market

• Sanctions liability extends far beyond sanctioned individuals – parties “connected” to Russia also trigger risk.
• Enforcement is clearly accelerating, with regulators revisiting historic transactions.
• HMRC has warned the art market that “unusual sales” are deemed higher risk and should be considered more carefully

What Art Market Participants should be doing

✔ Strengthening sanctions screening to capture indirect links and jurisdictional risk

✔ Reviewing procedures for high-value, cross-border, or logistically complex sales

✔ Documenting decision-making clearly at the time of each transaction

✔ Ensuring staff know:

• to report to the Money Laundering Reporting Officer, any suspicion that a party or transaction is connected to Russia
• The rules about what activity is prohibited in the UK under the UK Sanctions and Ban regimes
  
  

If you’re unsure whether your current framework would withstand regulatory scrutiny, we’re happy to help. Get in touch.