Anti-Money Laundering for Dealers In Works of Art
The Government has now published the amendments to the Money Laundering Regulations that bring ‘art market participants’ in scope for money laundering regulation as from 10th January 2020 http://www.legislation.gov.uk/id/uksi/2019/1511. Here is a summary of what we know.
- An art market participant (AMP) is defined as anyone who by way of business trades in, or acts as an intermediary in the sale or purchase or works of art and the value of the transaction or a series of linked transactions amounts to €10,000 or more. AMPs may include art dealers, auction houses and operators of freeports when storing works of art for a person valued at €10,000 or more.
- For the purposes of the Money Laundering Regulations, works of art are defined in s21(6) of the VAT Act 1994.
- All AMPs will be subject to regulation and supervision by HMRC. Existing obligations under the Proceeds of Crime Act 2002, which require all art dealers to prevent money laundering and report suspicious activity for al transactions, irrespective of value, remain in place.
- For those who are now impacted by the regulations, new obligations include:
– Registration with HMRC after 10th January 2020 and at the latest, before 10th January 2021
– Conducting an AML Risk Assessment of the extent to which your business is exposed to money laundering risk
– Writing and implementing policies and procedures
– Carrying out customer due diligence (CDD) or Know Your Customer (KYC) checks on buyers of works of art
– Appointing a nominated officer or Money Laundering Reporting Officer (MLRO)
– Training staff on AML risk and the internal measures designed to manage these risks
– Reporting suspicious activity to the National Crime Agency
– Record keeping
- Art dealers must also ensure that they do not transact with sanctioned persons and entities.
- Your AML policy statement and procedures should reflect the findings of your AML Risk Assessment. The checks and controls which you implement should be proportionate and risk-based.
- CDD or KYC checks involve collecting information about the identity of your customer, verifying this information via a reliable independent source, managing the risks of dealing with high risk persons (including persons who are politically exposed) and ensuring that red flags are investigated.
- CDD should be completed when the client first approaches you with a transaction in mind. In cases where this is simply not possible, the transaction may be progressed, but should not be concluded until CDD has been completed. In practice, this means that when selling a work of art, it should not be passed to the client until all CDD aspects have been concluded.
- If you haven’t already done so, ensure that you allocate time and financial budget for compliance in
- HMRC have wide ranging powers to inspect and impose penalties for non-compliance.
For further information please contact Rakhi Talwar on +44 7896 205533