Using DNA to Track Theft
The global art market is plagued by growth in the illicit trade of stolen art, artifacts and precious works by complex criminal networks and terrorist organizations.
Today, the illegal art trade is said to be worth around $6 billion a year, not including unreported crimes, according to FBI estimates.
And the problem is getting worse with the ever-rising value of art and the globalization of the market making it easier for criminals to exploit.
“It’s just the systemically inherent nature of the industry that as art values go up and more people become involved because it’s a global market, opportunities and gaps are going to arise that can be exploited,” said Lawrence Shindell, chairman of Aris Title Insurance Corp.
“Museum thefts get the most attention, however most art thefts are from residences, galleries and even storage facilities, where security could be relatively lax.” — Jennifer Schipf, senior underwriter, fine art and specie at XL Catlin
“That includes everything from simple burglaries and theft through to the more recent terrorist financing through stolen and laundered objects.”
Expensive works of art, such as Picasso’s “Les Femmes d’Alger,” which fetched a record $179.4 million at auction in May, or a nude painting by Modigliani that sold for $170 million last month, will inevitably attract criminals looking to make a quick buck.
“In the last six months, we have seen the sale of two of the world’s most expensive paintings at auction,” said Jennifer Schipf, senior underwriter, fine art and specie at XL Catlin.
“Thieves see these numbers too, but what they don’t realize is that they won’t realize the same value when selling stolen works of art.”
However, it’s the sophisticated art thieves operating in the international black market and using stolen works as collateral on other deals who are the bigger problem, she said.
From an insurance perspective, she said, the greatest risk is the transportation of art when collectors lend out their works to galleries and museums.
Schipf said that the key to prevention is to remove opportunity for thieves by improving security.
“Museum thefts get the most attention, however most art thefts are from residences, galleries and even storage facilities, where security could be relatively lax,” she said.
It is also important that collectors keep an updated list of their works of art and where they are located, she said.
Collectors also need to safely store appropriate paperwork including sales receipts, appraisals and shipping documents in order to prove their value and authenticity, she said.
“Thieves may prey on storage facilities with under par security and if regular audits are not performed, something could be stolen and the collector wouldn’t discover it’s gone for some time, even years,” she said.
In response to the rising tide of art theft and to improve transparency in the market, the Global Center of Innovation at the University of Albany in New York launched a scheme to tag new artworks with synthetically bioengineered DNA, enabling them to be authenticated within seconds, and beyond reasonable doubt.
The i2M Standards initiative, which is being developed in partnership with artists, curators, research scientists and law firms, and is being funded by art insurer Aris, will go live early next year.
“The i2M initiative is a systemic standards-driven approach to solving a host of problems with the identification of objects,” said Aris’ Shindell.
“It works much like VIN numbers on vehicles to determine who owns the piece, and therefore whether it is stolen or not.
“This technology provides a safe, reliable and fully encrypted means of authentication of artwork that is being produced by contemporary artists as well as the secondary market for works that have already been produced.”
The technology, which has been two and half years in the making, works by the encrypted DNA being imprinted onto labels which are stuck onto new artwork.
The label can then be scanned, with the details being compared to an online database to verify authenticity.
As well as identifying stolen art, the new technology will also help uncover fakes, many of which are so convincing that teams of investigators often have to be brought in to study them.
As many as two in five pieces sold today are said to be copies, according to industry estimates, with forgeries reported to cost the market $57 billion every year.
Erik Fischer, senior vice president at Willis Fine Art, said that art fraud is on the increase, with thieves targeting early 20th century oil canvases, because of their high value.
“We have had some clients that have been burnt in the millions of dollars they have spent on works of art that have turned out to be fraudulent,” he said.
Insurers rely on appraisers to authenticate art and to do their own due diligence to know which pieces are likely to be forged, he said.
“Within the insurance world, when you see a certain name of artist or item come up it immediately raises a red flag, so you have to be very careful,” he said.
“The trouble is fraud can often be quite a gray area because even if you have suffered a loss, it is not a physical loss, which is what you would typically be covered for under your insurance policy.
“There are also cases of criminals using insurance to validate the authenticity of the work and then cancel their policy to get refunded in ‘clean money’.”