The Treasury Department announced sanctions Friday against a diamond dealer who the government said has used an art gallery in Beirut, Lebanon, and an extensive personal collection, sprinkled with names like Pablo Picasso and Andy Warhol, to shelter and launder money.
American officials described the diamond dealer, Nazem Said Ahmad, who lives in Beirut, as one of the “top donors” to Hezbollah, a political movement based in Lebanon that is considered a terrorist group by the United States. The Trump Administration said that Mr. Ahmad, born into a wealthy family with a diamond business, was involved in “blood diamond” smuggling.
Mr. Ahmad, one of three people on whom Treasury officials imposed sanctions, is perhaps better known for what he collects than what he sells.
A spread in Architectural Digest Middle East last year showed the walls of his Beirut penthouse lined with vivid paintings and bright sculptures. The article said his collection included works by Jean-Michel Basquiat, Ai Weiwei, Thomas Heatherwick and Marc Quinn. Mr. Ahmad’s Instagram account, on which he posts pictures of galleries, artwork and artists, has 163,000 followers. He is known in Beirut for collecting international art, primarily American.
The Treasury Department, in a statement, said Mr. Ahmad used his art as a place to shelter money “in a pre-emptive attempt to mitigate the effects of U.S. sanctions.” It said he also set up a gallery in Beirut, the Artual Gallery, as a front to launder money. The department declined to provide details on how that process worked. The gallery, which is run by his daughter, also focuses on American art.
There has long been a debate in the art world about how susceptible the trade is to money laundering. It has obvious vulnerabilities: Transactions are largely unregulated, and the identities of buyers and sellers are typically not publicly disclosed. The value of art is also subjective, and easy to inflate or deflate, which can create a path to move large amounts of money. Buy a painting for $100,000 today and sell it for $1 million tomorrow, and you’ve just moved $900,000.
But many in the art world have strongly denied that illicit deals take place, insisting that a dearth of examples show that the perception of the art market as a place infested by a shadowy underworld is just a myth.
The Treasury Department disagrees. Marshall Billingslea, assistant secretary for terrorist financing, called the buying and selling of art a “well understood method of illicit financial transactions.”
In this situation, Mr. Billingslea said, “we have a Hezbollah financier who is converting a significant amount of his ill-gotten gains through the blood diamond trade into high-value art, that in turn creates a lack of transparency in the transactional process,” he said. “It’s a way of getting around the formal financial system.”
The Artual Gallery did not respond to a request for comment, and attempts to contact Mr. Ahmad were unsuccessful. He has previously denied reports that he was linked to financing Hezbollah. In 2001, in response to articles that said he was part of a property transaction in Lebanon connected to the group, he described the deal as an ordinary business transaction that had nothing to do with the organization.
The two other men who were placed on sanction because of what the government described as their support for Hezbollah were a businessman based in the Democratic Republic of Congo, and a Lebanon-based accountant who works for one of the businessman’s companies. Those men and Mr. Ahmad are now essentially blacklisted from the U.S. financial system, and those who do business with them could find themselves facing sanctions as well.
The United States said that Mr. Ahmad had provided funds “personally” to the secretary-general of Hezbollah, Hassan Nasrallah. Mr. Nasrallah has said that the United States is exploiting or even instigating anti-government protests in Lebanon, which have drawn hundreds of thousands of people into the streets in recent weeks. The American sanctions aimed at Hezbollah in recent months have helped fuel the perception among some in Lebanon that the United States is meddling there to undermine Hezbollah and Iran.
Peter Libbey contributed reporting from New York and Vivian Yee from Beirut.