Anti-money laundering regulation wraps around the UK art market
On 10th January 2020, the EU’s Fifth Money Laundering Directive will come into effect in the UK via an amendment to the UK Money Laundering Regulations 2017.
From this date, art businesses and individuals who trade or have any financial involvement in an art transaction of a value greater than €10,000, will be subject to AML regulation by HMRC and required, on a risk sensitive basis, to take steps to detect and prevent money laundering. Failure to do so may result in criminal penalties.
While the Proceeds of Crime Act 2002, has always legally obliged persons who know or suspect that they may be involved in facilitating money laundering to report such activity to the appropriate money laundering authorities, formal regulation of the art sector is a game-changer.
Any individuals and businesses trading in works of art valued at €10,000 or more will be obliged to take appropriate measures to:
- Risk assess their exposure to money laundering
- Implement an AML policy and appropriate procedures, systems and controls to prevent
- Identify their customers, including the beneficial owners of works of art and the beneficial
owners of the funds used for the purchase of works of art
- Conduct appropriate due diligence on works of art, the customer and the transaction itself
- Train themselves and staff on AML detection and prevention
- Report suspicious activity to the National Crime Agency
- Retain records
The British Art Market Federation is leading an initiative, supported by HM Treasury and HMRC to draft guidelines for the British Art Market on complying with the new AML obligations. Once approved by HM Treasury, compliance with these guidelines will afford businesses with industry focused guidance which will be taken into account by a court when determining whether a person or business subject to regulation has complied with their AML obligations.
Now is the time to start preparing. To understand the impact of the incoming regulations please get