Gregor Kleinknecht and Petra Warrington discuss new anti-money laundering rules for the art trade
As of today, 10 January 2020, “art market participants” (including dealers, galleries, agents and auctioneers) are now part of the “regulated” sector for anti-money laundering purposes under The Money Laundering and Terrorist Financing (Amendment) Regulations 2019, which were laid before Parliament on 20th December 2019.
Members of the art trade that carry out transactions or series of linked transactions involving works of art amounting to EUR 10,000 or more, must now conduct ongoing risk-based due diligence on the clients involved in those transactions. The definition of works of art is in line with current VAT legislation and excludes antique furniture and some decorative objects. Please see our previous article “AML for the art trade: how not to go to jail under the 5th Directive” for a more in-depth discussion of due diligence.
HMRC is the supervising body responsible for overseeing art market participants, keeping a register of supervised businesses and checking that they are complying with their obligations under the new regulations. Failure to comply with the regulations is an offence, which can result in a range of sanctions to include fines, suspension from dealing in high value transactions and imprisonment.
HMRC have indicated that a staggered approach to business registration will be taken and that there is a 12 month period from today for art market participants to register with HMRC, if required.
There is no grace period, however, for compliance with due diligence, record keeping and reporting obligations, it is clear that members of the art trade dealing in high value transactions will need to give this matter their immediate attention. Compliance includes putting risk assessments for new and existing clients into place, implementing anti-money laundering policies and procedures (and ensuring that they are followed), appointing a nominated officer and a compliance officer, where appropriate, and continually monitoring and training their staff. We have been advising clients on these matters for some time and giving seminars to dealers and auctioneers on what steps to take prior to implementation of the regulations. If no steps have been taken yet, there is no time to be lost.
We expect to see long promised official guidance on the new regulations published shortly. Members of the trade should regularly check the HMRC website and any information produced by their trade bodies in relation to the registration process.
Please watch this space for more in-depth coverage of the regulations and advice for the art trade.
If you would like to discuss anti-money laundering compliance and your particular circumstances with us, please contact Gregor Kleinknecht (gregor.kleinknecht@hunterslaw.com) or Petra Warrington (petra.warrington@hunterslaw.com)