A new law, which came into force on 10 January, has ushered in material changes to the regulation of the art market, extending the application of the UK’s anti-money laundering legislation to the sector.
The new law, incorporating the Fifth Money Laundering Directive, introduces increased compliance requirements and the risk of criminal liability for businesses operating in the art market, meaning that companies and sole traders alike must now ensure their anti-money laundering processes and procedures are fit for purpose.
The enhanced regulatory obligations will clearly affect customers, as well as art dealers.
The new regulations – which essentially amend existing legislation (The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017) – set out the obligations on the regulated sector in combatting money laundering and terrorist financing.
From 10 January 2020 these regulations now apply to “art market participants”, defined as a firm or sole practitioner who, by way of its business, trades in, or acts as an intermediary in the sale or purchase of “works of art”. The obligations contained in the regulations only apply where the value of a transaction, or a series of linked transactions, is €10,000 or more.
Additionally, the regulations also apply to operators of freeports, where they store works similarly valued. “Works of art” includes pictures, collages, sculptures, tapestries, textiles, prints and ceramics. Other antiques are excluded.