The Art World (and Reflecting Pool) Aren't Money Laundering; It's Worse.

Comparing two moments of public expression to see what’s gone awry. On July 1, a Russian couple, famous for a Netflix show and clad as sexy cat burglars, hoisted a flag atop the Empire State Building that said: “When the Power of Love Beats the Love of Power, the World Knows Peace.” They were arrested. On that same day, a US Air Force Major stood on the stairs of the Capitol with a sign that said, “Impeach. Convict. Remove.” He was arrested. Both of these stories explain why being specific and nuanced is better for our society. But we’ll return to them.

Money Laundering and Other Lies

The art world is not money laundering, and neither is the reflecting pool. I know I would get many more shares on this piece if I acquiesced to that characterization of contemporary art or of Trump’s construction-destruction efforts in Washington, DC. But I have ethics and a working knowledge of art-related financial terminology, so I can’t.

The essential thing to understand is why these things are not money laundering: most financial dealings in the art world, as in real estate, are legal. That is the scandal. I make videos clarifying what money laundering is not, to be pedantic. I do it to remind the public that most of the art world is legally engaged in unethical practices, and the same is true of real estate.

Often, the art world and the real estate world are the same people. Take the Alexander brothers, the Israeli American luxury brokers convicted this year of federal sex trafficking. Before their arrest, they were fixtures of the Art Basel Miami party circuit; they represented top collectors like Leon Black, and they brokered Ivanka Trump and Jared Kushner’s purchase of a 24 million Miami mansion. Art, property, and impunity are all traveling in the same social circle.

Money laundering is a very specific crime with a textbook anatomy. Financial crime scholars describe three stages: placement (getting dirty cash into the financial system), layering (moving it through transactions to obscure its origin), and integration (spending it as apparently clean money). All three stages have to happen, and the money has to start out criminal.

Historically, one of the most common laundering vehicles in the United States was, the story goes, the laundromat, from which the term supposedly comes. Illegal money came in as coins and small bills. Nobody asks where quarters come from. Someone selling drugs could own a laundromat and claim the drug cash as machine earnings, and in a world before digital records, there was no way to audit how many washers actually ran.

Now hold art up against that anatomy. People who earn illegal money are not openly bidding at auction or walking into galleries, because the art market runs on paperwork, and people who do illegal things are allergic to paperwork. Since 2020, art market participants in the UK and EU have been legally required to verify their clients’ identities. Major auction houses have compliance departments, and any US cash transaction over $10,000 generates an IRS form. When the US Treasury studied the question in 2022, it found only limited evidence of money laundering through art and declined to recommend the emergency regulation everyone assumed was coming. The famous counterexample, the sanctioned Rotenberg oligarchs buying art through shell companies (documented in a 2020 Senate investigation), was sanctions evasion by men whose money was, at least on paper, already “clean.” Even the villains prove the point: the vulnerability was shell company secrecy, not the paintings.

The real problem is legal

The actual scandal in both art and real estate is the lawful machinery by which the uber-wealthy remain so. First, cronyism and kickbacks. Giving your friends contracts is cronyism, and until Trump started handing out federal ones, it was not generally illegal. Federal projects require competitive bids, and so do state building projects like the ones I have worked on. The bidding system protects the person who eventually walks into that building. Builders must prove their plan and their cost per square foot, and a committee chooses the best solution. Often that is the cheapest bid, but not always. Many state and federal projects require abatement, the safe removal of asbestos, which is specialized work. In a bid, a more expensive team with deep abatement experience can rightly win. Ripping out that process so your friends can fleece the public is the actual crime story in DC, and it needs no laundering metaphor to be damning.

In the art world, cronyism looks like helping collectors pump the value of their holdings. You are friends with a curator who exhibits your artwork; the museum show raises its value; the museum is happy, and the collector is richer. The art world runs on these friendship-profit relationships. And when money changes hands along the way, a bonus, a finder’s fee, that is a kickback. Outside government, it is often not even illegal.

This does not touch tax strategy, which is enormous in art and alive in real estate too: donation deductions, appraisal games, foundations. Nor does it touch the transformation of hard assets into liquidity, borrowing against a building or a painting so you enjoy the wealth without ever triggering a taxable sale. Leon Black, the collector the Alexanders repped, paid Jeffrey Epstein $ 158 million for what was described as tax and estate-planning advice. Nobody needed to launder anything. The system was the service.

The theory: why the buildings are tacky, and the art is boring

None of this is new, and the theory has existed for over a century. Thorstein Veblen wrote about the Gilded Age wealthy employing conspicuous consumption to show their status, like a Sargent over the sofa and a glass tower with your name on it are the same purchase.

Wealth reproduces itself not just through money but through cultural capital, the ability to signal that you are the kind of person who deserves the money. Taste, as Pierre Bourdieu argued, is class warfare by other means. This explains the aesthetic outcome my viewers keep noticing. So much luxury real estate is intensely boring because the uber-wealthy want the showiest buildings for themselves and the most boring for the poor. Much of contemporary art is punishingly cerebral because the same people who own very boring houses want visitors to walk in and think they are smart. When one small group holds all the resources, they also decide what the resources look like. The blandness is a purposeful way to gatekeep and signal importance.

Why “money laundering” is the comfortable lie

Here is why I will not let the phrase slide, even though it would get me shares. Calling all this money laundering implies it is outside the law, and if it is outside the law, the solution is simple: catch the criminals. Someone else’s job. Case closed. You can post about it and feel finished.

The sociologist Stanley Cohen called this method of offering up red herrings the nomination of the folk devil. When a society cannot face a structural problem, it elects a villain to carry it. The person with the least power and the least money in the entire chain, the artist, is the target, and then the system stays the same. This is the same as oil companies telling us to focus on our personal carbon footprints rather than restructuring the industry. It converts a systems problem into a whodunit, and a whodunit asks nothing of you.

But a legal problem that implicates all of us is exactly why the criminal framing is so seductive. If the game is lawful, then the tax code that permits it is ours. The politicians who wrote it are our politicians. The museums whose boards launder reputations (that word, ironically, fits artwashing better than it fits art sales) run on our attendance and our civic trust. The cynical shrug- “it’s all corrupt anyway,” is not insight. It is a permission slip to do nothing, and the uber-wealthy could not design a better shield than a public that has given up on the distinction between crime and policy.

Performance and Performative

Performative has become a contranym. In Judith Butler, for example, "performative" meant becoming through action, so gender being performative meant that you are your gender through your actions. Now, to be performative is to act without meaning; your actions are empty of meaning. In that transformation, from the 1980s to today, we had the rise of social media and the fall of the American middle class. We have more access to each other, and we’re more alienated.

Which takes me back to the banners and actions on July 1. The two Russians had social media posts ready with their glowing faces. Everything, now to the thoughtful text, was poised for mass consumption. Love conquers all, check. Peace message, check. Gorgeous couple, check. Many online felt that their actions were still helpful in promoting peace and love on the international stage, even if they did so for personal attention. But they had nothing to lose. For people whose job is being a daredevil, this only increased the brand's value. They put nothing essential on the line because their goal was themselves. They were acting illegally for their own gain and had no problem facing the consequences. This is analogous to money laundering—an individual choice for an individual win.

Conversely, an Air Force Major is now in jail for upholding his oath to protect the Constitution. He had no social post scheduled to load. There is no upside to turning his life and career upside down for himself personally. However, there is a huge upside for society. The people he was fighting against are like the bigger problems in the way of the uber-wealthy with high assets.

When we allow ourselves to vilify single people, like artists, or pretend a systematic problem is an isolated incident, we’re acting against our self-interest. The stakes are collective. Art and housing are both, at their root, commons: how we shelter and understand each other. A system where a tiny group holds all the resources and therefore decides what our cities look like and what our culture says is bad for real estate in exactly the way it is bad for art. It is a whole mess of a system. But it cannot be changed if we do not all understand what exactly is broken, and it will never be changed by people who have been handed a fake crime, so they will stop looking at the real one.