The UK Art market must be prepared for the deadline which is soon approaching to comply with the new AML rules now being placed upon them.
Art Market participants will have to register with the HMRC if they operate as a high-value dealer. You are considered a high-value dealer if you are dealing in goods as an agent or auctioneer and the transaction involves goods with an open market value of €10,000 or more.
The UK government extended the deadline for Art market Participants to register under its new Anti-Money laundering rules. Which have been extended to 10th June 2021.
By June, the UK will require Art Market Participants to register before they continue to carry on their business, defined as “a transaction of €10,000 or more, or a series of linked transactions of €10,000 or more”. In other words, every auction house, professional art dealer, art financier, or adviser must sign up.
Even though the UK has left the EU, it will continue to enforce the EU’s Fifth Money Laundering Directive. The art market participants will have to carry out customer due diligence (CDD) on the ultimate beneficial owners (UBOs), of the art they help buy or sell. They would also need to keep a record and report any suspicious activity.
Several UK arts organisations have launched a free nationwide training programme to help galleries and artists comply with the new rules. Those behind it say that breaching them will bring heavy financial penalties and criminal prosecution.
The arts will be under greater scrutiny as a sector after the June deadline and HMRC will be looking to make examples of those not following the new rules.
Art market participants are now obliged to:
- Register with HMRC before June 10th, 2021.
- Carry out a risk assessment of the extent to which they are exposed to money laundering.
- Carry out customer due diligence measures on customers before they conclude a transaction.
- Appoint a nominated officer (and deputy) and report suspicious transactions to the authorities.
- Maintain a prescribed range of policies, controls and procedures.
- Train staff appropriately.
- Keep appropriate records of customer due diligence and transactions.
The importance of the introduction of the AML rules for the art market is to put an end to the opportunity to launder money and carry out fraudulent transactions, which for many years the art market had been a great method to do so.
The hope is that auction houses and dealers will be cautious as to whom they sell items to and will investigate where a buyers money comes from. The sudden introduction of new requirements to conduct identity checks and carry out other due diligence on art buyers came as a shock to the UK art world, as it traditionally was a sector that operated on a simple transaction despite art being dealt with at such high value.
It is important to ensure that as a high-value art market participant, you are registered and comply with the new rules.
Anti-Money Laundering Services for AMPs
At AML and Compliance, we work with Art and Antiques Dealers to secure their authorisation or those who already have it to ensure they have effective AML policies and procedures in place to meet their regulatory requirements on an ongoing basis.
Details of the services we provide are contained on our service page which you can review to obtain detailed information on how we work with dealers in the art and antique sector.