How the new anti-money laundering laws will affect art collectors



There is now a greater expectation of collectors to ensure that they acquire art legally and ethically. Most collectors are either individual clients or referred to as “”art market players”(AMP), legally defined as a dealer who purchases on behalf of his company or a client, and has processed one or more related transactions with a value greater than € 10,000 (approximately $ 11,900).
Therefore, if a collector intends to sell works of art from his collection for a value of € 10,000 or more, he will be subject to substantial new regulations. Those who remain on the buying side of art market transactions will still need to take additional steps, but will not legally need to do due diligence. There was also reports loopholes available to dealers who do not want to comply with the AML, but their use carries significant risks.

“Although it is good practice for buyers to exercise due diligence on the artwork and its seller before purchasing, as customers, buyers are not required to carry out checks. anti-money laundering on their sellers, ”Jasani said. “When an AMP buyer buys for resale, the buyer must perform anti-money laundering checks on the end buyer.” Thus, if a Paris-based dealer buys a € 50,000 painting at auction on behalf of an Italian collector, they will have to perform an AML due diligence on the collector before finalizing the sale.

Additional steps required from the non-AMP collector include providing personal identification documents and proof of address, as well as identifying the beneficial owners of companies, trusts, special purpose vehicles and organizations to AMP s ‘they buy through such a structure. While complying, collectors should always be careful not to transfer this information electronically without encryption – compliance should not become an exposure to fraud or identity theft. Additionally, the EU General Data Protection Regulation (GDPR) 2018 guarantees a minimum level of privacy protection for involved MPAs in Europe and the UK.

Along with this, AMP is required to do a minimum of due diligence research on collectors who buy from them to ensure that they do not generate red flags. Therefore, collectors should expect their dealers, advisers and auction house contacts to ask them more questions.

According to Tamara Bell, art and luxury asset law specialist at Charles Russell Speechlys, the red flags include: “hot the jurisdictions involved in the transaction (eg funds from Syria or Zimbabwe); the buyer being a “politically exposed person” (for example, a politician or board member of a public oil company), and therefore more likely to be involved in corruption; or the buyer (or seller) who has already been involved in AML investigations.

Susan J Mumford, founder of ArtAML, an art market compliance platform, said collectors should embrace the new legal regime and its benefits. “The reality is that the AML regime is not going to go away, and from what I hear, the UK will likely stay in tune with the EU as the scope changes over time,” he said. she declared. “My recommendation to individuals and institutions is to take a leaf from my book: accept that AML is more and more a reality of participation in the modern art market. She added: “This mindset will put you ahead of the game.”



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