New AML Regulations Include Art Dealers
Anti-money laundering laws in the UK are outlined in the Money Laundering and Terrorist Financing Regulations, but on the 10th January 2020, this regulation was amended so that art dealers and “art market participants” will be required to comply to this newly altered legislation. This means art dealers will need to register with an AML supervisory board as well as:
- Conduct a risk assessment
- Appoint a Money Laundering Reporting Officer (MLRO)
- Document your AML policies and procedures
What this amendment to the Money Laundering and Terrorist Financing Regulations 2019 means is that art traders are now regulated and have to do their part when taking transactions with values over £8,500 (approx. 10,000 Euros). Art dealers will need to carry out “risk assessments” when they think necessary and report any unusual activity surrounding a client or customers.
How will this impact art dealers?
Of course, with new regulations in place, the industry will have to adapt. Under new AML regulations, art dealers will have to have a more “risk-based” approach when it comes to identifying and assessing certain trading options. This means you will need to carry out Customer Due Diligence (CDD) – the process in which you collect relevant and appropriate data on your client or customer before you conduct business with them.
What if the risk is high?
Certain circumstances will seem riskier than others, and if this is the case, higher CDD is required. If further CDD is needed, you will need to obtain additional information on the client and identify where the client or customer is getting their funding from.
What makes someone ‘high risk?’
The need for enhanced due diligence is triggered by:
- A client from a ‘high risk’ country – There are currently 16 countries identified as ‘high risk countries.’ A few of them include Afghanistan, Bosnia and Herzegovina, Iraq, Uganda, Sri Lanka, Iran, and Democratic People’s Republic of Korea. There are many other countries, so be sure to look over the list.
- A client who is a Politically Exposed Person (PEP) – What this means is that the person provides a higher chance of being involved in potential bribery and corruption because they are a public figure and have a level of trust.
- No face to face interaction – A lack of transparency is a huge cause for concern, so if a client or customer is refusing to speak with you personally, you will want to look further into the transaction. This may also be true if a client is using someone else to go about completing their deals.
- Any doubts you may have over the transaction – If you have been an art dealer for a number of years now, you will know when a transaction feel abnormal and underhand. It is your job to watch over deals to ensure they are aboveboard.
You will have to undergo training and learn about the correct procedures. However, you will also need to have your staff undergo AML training and keep a record of everyone having done so.
At LEM Verify, we have developed a solution that is able to make identity verification more reliable and rigorous without requiring customers to jump through laborious hoop after hoop. That means that you can focus on your core business, safe in the knowledge that you are meeting all necessary regulations.
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