The UK implemented the directive through amendments to the UK’s money laundering regulations. The amendments put art market participants (AMPs) into the regulated sector, the same category as financial institutions and estate agents. AMPs include art dealers, auction houses and operators of freeports – but not artists selling their own works.
Since 2003, the Proceeds of Crime Act has required persons in the regulated sector to report any person that they know or suspect is engaged in money laundering. The amendments go further, AMPs must:
- Follow a risk-based approach to prevent and detect money laundering, considering the nature of the business and the level of risk in a particular customer.
- Carry out customer due diligence.
- Undertake ongoing monitoring activities.
- Train their staff to recognise money laundering.
- Prepare policies and procedures on anti-money-laundering.
- Appoint a nominated officer and register their business with HM Revenue & Customs.
AMPs must also verify their customers’ identities for transactions concerning works of art valued at or more than €10,000. HMRC can impose a fine on AMPs if they breach these obligations and in serious cases can result in imprisonment.
In May 2021, the UK’s National Crime Agency issued an amber alert inviting businesses in the regulated sector, such as financial institutions, to file suspicious activity reports related to art and antiquities.
In the US, the enactment of the Anti-Money Laundering Act of 2020 kicked off a suite of measures aimed at cracking down on illicit finance in the US art and antiquities market. The first of these was to amend the definition of "financial institution" in the Bank Secrecy Act to include persons involved in the antiquities trade.
The definition already included a long list of seemingly non-financial businesses, such as credit card companies, pawnbrokers, sellers of cars, planes and boats, and people dealing in real estate. The BSA requires these financial institutions to keep records and file reports with US authorities that assist in preventing and detecting money laundering and financial crimes.
Regulations from the US Treasury Department’s Financial Crimes Enforcement Network are due to be published in the coming days. AMLA also directed that a multi-agency review of the art market be completed by January 2022, which will almost certainly lead to similar regulations.
Fincen and the Office of Foreign Assets Control have also issued guidance reiterating and clarifying existing obligations under the BSA and economic sanctions regimes. Fincen issued a March 2021 notice warning regulated financial institutions to be aware of illicit activity involving art and antiquities within their businesses and requested that they follow specific instructions in filing SARs related to art and antiquities.
Revelations about the Rotenbergs spurred the OFAC to issue an October 2020 advisory on sanctions risk in the art market, reminding participants of the strict prohibitions on engaging with those on the Specially Designated Nationals and Blocked Persons (SDN) List, and highlighting the importance of a risk-based compliance programme. It also clarified that the Berman amendment of the International Emergency Economic Powers Act, which exempts informational materials, including artwork, from sanctions requirements was not a safe haven for transactions with SDNs.
