Recently, in a period of several days, five ArtAML™ clients informed us about their banks performing detailed AML audits. Why? Banks have generally determined that businesses transacting in art are high-risk.

This is resulting in annual AML audits, in which you need to:

• provide an up-to-date AML Risk Assessment & Policy (with policies, controls and procedures);
• explain how you would submit a Suspicious Activity Report (“SAR”);
• answer a number of questions that evaluate your compliance program (often including training taken amongst many other points) and test your acumen; and
• in some cases, provide information on how you conducted CDD.

Be warned: You might need to educate the bank manager on how AML applies to the sector. We’ve seen some banks request information on what CDD was conducted for transactions below the €10,000 threshold. Unless there was potentially suspicious activity, the need to conduct CDD would not have applied.

Another word of caution is to be cognisant of data protection. We’ve heard of some requests for personally identifying information (“PII”) that has been collected by the Art Market Participant (“AMP”). However, the bank is not legally required to also have copies of that information. Our understanding is that banks have accordingly accepted that data laws don’t permit AMPs to transfer such personal data to them. It’s still possible for the bank to establish what CDD was performed for differing transactions of interest.

As for documents required by banks, our Compliance Team can deliver them on an expedited basis. However, be aware that if your business is regulated for AML, you have a legal requirement to have these in place dating back to when legislation took effect.

 Get in touch if you require support with a bank’s AML audit or want to learn more.