Art dealers face AML duties on all big transactions

Art market participants must apply the risk-assessment and policies, controls and procedures requirements to all transactions over the AMP threshold, not only to cash transactionsGOV. HMRC's sector risk assessment for art market participants previously said those requirements within the guidance only applied to cash transactions, including linked transactions, over the thresholdGOV; the guidance now says they apply to all transactions, including linked transactions, over the thresholdGOV. The single-word change from cash to all materially widens the stated scope for galleries, dealers, auction houses and freeport operatorsGOV.

An art market participant is a firm or sole practitioner that by way of business trades in, or acts as an intermediary in the sale or purchase of, works of art where the transaction or series of linked transactions amounts to 10,000 euros or moreLegislation, or that operates a freeport where stored works of art reach that valueLegislation. The guidance itself expresses the threshold as at least £10,000GOV. A linked transaction can arise where a transaction over £10,000 appears deliberately broken into smaller payments against a single invoice, or where several works each valued below £10,000 are sold together so the total exceeds the threshold. Every participant must carry out a risk assessment covering money laundering, terrorist financing and proliferation financing, take HMRC's published sector assessment into account, keep an up-to-date written record, and produce it with the underlying information when HMRC asks. Where risks are identified, the business must put policies, controls and procedures in place to manage and mitigate them, and must update both the assessment and the controls before starting new services or changing how the business operates.

The widened wording does not remove the separate cash rules. Most art market participants do not deal in cash, but a business that makes or accepts cash transactions above £10,000 must additionally register for supervision as a high value dealer and ensure its risk assessment and controls manage those cash risks. Registration as an art market participant trading above the threshold, with appropriate controls in line with regulatory obligations, remains required; HMRC asks to be told about businesses suspected of trading unregistered, and a suspicious activity report to the National Crime Agency should be considered.

Legal basis: Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 regs 14 (art market participant), 18 and 18A (risk assessments) and 19 (policies, controls and procedures); HMRC sector risk assessment AMLG3100GOV.