There certainly seems to be something nefarious happening here but how are they laundering money this way?
I have a super Mario cartridge. I also have a lot of drugs (or whatever) that I'd like to sell, but I don't have a distribution network, so I have to sell at a wholesale price. I put up the proxy object for auction. You bid far more than we think anyone would pay for the proxy object, and you win. We've made separate arrangements for the drugs (or whatever) so you already have them, or will get them soon.
Now I have a pocket full of legitimate cash. I think there's some biases stuck in American minds about Al Capone. He was a bad guy that did lots of illegal things. But his downfall was tax evasion. This approach gives me a reasonable explanation for all that money, and I can pay taxes on it, so I _appear_ to be an upstanding member of society.
OTOH, there might be something I'm not seeing here. In my country, private doctors at high-end hospitals accept cash as payment (even for major surgeries), which for common mortals would be a fiscal hell to convert into bank money, but they seem to be fine with it. I've noticed that most high-end hospitals also have a non-profit charity attached, and that many doctors have several big and ugly paintings in their offices.
It's true there's always going to have to be an initial transaction that's dirty. But if you have some (other) way to wash that, you can do all your following transactions as "art" sales, keeping the art in a freeport so it's never taxed as an asset and is just moved from one vault to another when these sales are made.