Government publishes guidance on money laundering risks in the art market
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19 July 2021
Ceri Davies
Senior Policy Specialist, RICS
On 28 June 2021, the UK government published its first assessment of the key areas in which those who buy, sell and store works of art are most at risk of becoming involved in money laundering and the actions they should take to avoid this.
The RICS Professional Statement “Countering Money Laundering, Bribery and Corruption” requires all RICS firms to evaluate and review the risks that their business presents, and consideration of this new government document will help firms and members comply both with this requirement and any legal requirements.
Since 10 January 2020 art market participants operating in the UK have been required to comply with the Money Laundering Regulations 2019 which include obligations to register with HMRC, to undertake risk assessments and train staff, and to have processes in place to conduct customer due diligence and ongoing monitoring of transactions and business relationships. An art market participant is defined in the legislation but broadly includes those who buy, sell (or act as an intermediary in the sale and purchase) or store works of art with a value of 10,000 euros or more.
The new risk assessment emphasises that art market participation is a considerable risk for money laundering because of the ability to conceal the art’s beneficial owners, the final destination of art, the wide-ranging values involved, the size and international nature of the market, and the ease of being able to transport art across borders. The risk assessment sets out common cross sector risks including those arising from anonymity of buyers and sellers, transactions that do not appear to be normal business practice, payments from high risk jurisdictions, remote sales as opposed to face-to face transactions; unusual delivery instructions, cash or “off the record” sales, and new customers with little trading history.
The assessment also sets out specific risks relating to the Regulations. In particular HMRC reports some misinterpretation of the requirements where reliance is used as part of customer due diligence and sets out the criteria that must be adhered to. There is also a reminder that verifying identity for online sales is different for face to face transactions with advice to conduct a video call to verify the identity of a person after receiving their documents.
Given the high risks involved, and the importance of compliance with the law and the RICS professional statements, we strongly recommend that members and firms involved in the art market read the available guidance and risk assessments and take specialist advice where necessary.
About the author
Ceri Davies
Senior Policy Specialist, RICS
Ceri Davies is responsible for a wide range of policy areas for RICS including oversight of the anti-money laundering area. Ceri is an undergraduate and post graduate of Cardiff University with a Masters in Public Policy and has worked for over 22 years in policy management and development. He brings his experience to RICS from positions within the UK Government, Welsh Government and across the private and third sectors.
