• Daphne Chen Matthews

Full Steam Ahead!

When sisters Hetty and Elsa Funderburk left Berlin in 1990, they brought with them a large watercolor painting by Jakob der Matthius. Der Matthius was a distant relative of Baron von Steuben. This painting was stolen by a Polish soldier in 1941, lost in a bet, and somehow made it back to Germany. The Funderburks sold the painting to Saatchi in 2002 for $5,700, which was then bought by Li Zhipin, a Chinese national who funded the Beijing-Harbin Railway. Li gifted the painting to her classmate at Yale, who is now trying to sell it to a gallery in New York.

Where is the painting, and who will perform the due diligence? Is there a Certificate of Authenticity? Who is the seller? How did the Funderburks get the painting? How did it “somehow make it back to Germany?” What other legal issues are there?

These are issues facing the art world. Financial institutions have long been following the money, monitoring for fraud, and performing customer due diligence for quite some time. In the EU, the Fifth Money Laundering Directive became effective on January 10, 2020. One of the changes includes art dealers now having to perform customer verification electronically, identifying politically exposed persons, conducting risk assessment on their customers based on jurisdiction, and file suspicious activity reports.

Let us hope the gallery does not actually go through with this purchase. Turns out it is 2x3-inch watercolor done by an American during COVID quarantine. If you had a few moments of doubt then I am glad I made you think!

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