On 8th January 2020, two days prior to the implementation of anti-money laundering legislation hitting the UK art market, HMRC as supervisory body of ‘Art Market Participants’ ran an informative HMRC. We found the Q+A equally informative, so be sure to read through the Q+As below, too.

Press play (which will take you to a separate webpage of HMRC):

HMRC webinar screenshot (Jan 2020)

(Alternatively, click here to watch the webinary replay.)

Questions + Answers (note that not all questions were answered and that this blog post will be updated when HMRC has provided them):

Q: What if we do not have the ID or passport photo of the client but his full name and address as well as email and phone number?
A: Hi, you must be able to identify and verify the customer, if you’re unable to do this with the information presented you must not proceed with the transaction.

Q: All of the payments we receive come from named bank accounts into our bank account, we never receive cash payments. Do we still need to register?
A: Yes

Q: We were told that HMRC will produce guidance in addition to that from BAMF. Is this correct?
A: Yes, this will be published shortly.

Q: Could you provide the link that we need to follow in order to register {as an Art Market Participant with HMRC]?
A: Hi here is the link https://www.gov.uk/guidance/register-or-renew-your-money-laundering-supervision-with-hmrc

Q: How much is the fee [to register as an Art Market Participant with HMRC]?
A: £300 per premises plus £40 per responsible person within the business.

Q: As a sole trader am I automatically the ML Reporting Officer?
A: Yes that is correct.

Q: Thank you. WHat is the annual fee for sole traders?
A: £300 per premises plus £40 for each responsible person in the business.

Q: Will AMPs be able to accept deposits to secure a transaction prior to finalising an AML check on a buyer?
[not yet answered]

Q: Will every qualifying transaction require the AMP to make enquiries about the purpose of planned transaction and source of transaction funds? (This point in the legislation might only apply for agents acting on behalf of a collector.)
[not yet answered]

Q: For someone we have done business with 15-20 years. We know them very well, would we still need to verify them?
A: Yes, although your risk assessment would tell you how often you need to do this

Q: What will be required of non-EU/UK businesses that are exhibiting at art fairs in the UK?
A: This is an issue we have been looking into in some detail. Any non UK business must still comply with UK legislation including the requirements under the money laundering regulations.

Q: What, if any, are the requirements for provenance (presumably for secondary market transactions)?
[not yet answered]

 

Q: Where can the definition of “works of art” for the purposes of the regulations be found?
A: Hi this is in the VAT act 1994 [https://www.legislation.gov.uk/ukpga/1994/23/section/21]

Q: Would an individual artist who sells exclusively through a gallery which complies with MLR also have to comply themselves individually, or is it ok just the gallery complies?
A: Hi, if the artist meets the definition of an AMP they must also register for supervision.

Q: I understand we need to conduct checks on customers to which we are selling a work of art. However, in our business, a lot of the material we sell is sold “on consignment” meaning we are selling this on behalf of an individual. In the same way we need to screen a potential buyer, are we by law obliged to also screen and check a “seller” i.e. the person who we are selling the painting on behalf of.
A: Hi, if the seller is also your customer then you’ll have two customers and need to carry out CDD on both

Q: Further to above question (by someone else) re: artists, my understanding is that an AMP is the ‘seller’. So if the seller is a gallerist, presumably an artist is a supplier and doesn’t need to comply. Is this understanding correct?
[not yet answered]

Q: Further to above question (by someone else) re: conducting DD on customer supplying work of art AND buyer of said work of art: It sounds like DD applies in both directions. Is this correct?
[not yet answered]

 

Q: If a work of art is bought by an individual via an agent to we have to identify the ultimate benefical owner only or the agent as well? If the invidual and not the agent pays us
A: Yes you will need to identify the beneficial owner

Q: Will AMPs be able to accept deposits to secure a transaction prior to finalising an AML check on a buyer?
A: Yes that is fine to accept a deposit and then conduct the CDD before the transaction is completed

Q: Further to above question (by someone else) re: artists, my understanding is that an AMP is the ‘seller’. So if the seller is a gallerist, presumably an artist is a supplier and doesn’t need to comply. Is this understanding correct?
A: if you meet the definition of an AMP, regardless of whether you are a buyer or seller you must register and comply with the regulations

Q: Further to above question (by someone else) re: conducting DD on customer supplying work of art AND buyer of said work of art: It sounds like DD applies in both directions. Is this correct?
A: the AMP must determine who their customers/clients are and conduct CDD on them regardless of whether they happen to be a buyer or seller.

Q: Will there be advice on how to store the copies of ID for each client – we are concerned with storing this data for GDPR purposes?
A: The processing of personal data in accordance with these regulations is lawful and necessary for the prevention of money laundering or terrorist financing and is for the performance of a task carried out in the public interest.

Q: My understanding is that HMRC will take a soft approach for the first year of legislation in UK, and expect AMPs to be actively working towards complying. AMPs are very concerned that they need to be fully compliant as of 10th January, however they don’t want to be conducting checks as yet if they don’t fully understand obligations. Obviously, the guidance hasn’t even be published. What clarity can you give? This is a significant problem – a worry and anxiety with much uncertainty. My own concern is that AMPs will start doing something that is insufficient in a rush, for example not having had the opportunity to understand taking a ‘risk-based approach’ etc.
[not yet answered]

 

Q: You have clarified that we have a year to register from the 10th – does this mean we must start carrying out CDD from the 10th or only after registration?
A: You need to cary out cdd from 10 January 2020

Q: My understanding is that HMRC will take a soft approach for the first year of legislation in UK, and expect AMPs to be actively working towards complying. AMPs are very concerned that they need to be fully compliant as of 10th January, however they don’t want to be conducting checks as yet if they don’t fully understand obligations. Obviously, the guidance hasn’t even be published. What clarity can you give? This is a significant problem – a worry and anxiety with much uncertainty. My own concern is that AMPs will start doing something that is insufficient in a rush, for example not having had the opportunity to understand taking a ‘risk-based approach’ etc.
A: While firms are expected to be compliant with the new requirements from 10 January, HMRC will take into account the short lead-in time businesses have been given to implement all the new requirements in assessing the response to any non-compliance. Each case will be assessed on it’s own merits.

Q: When can firms in the art industry register their appointed MLRO with HMRC? are the registers open alreday, if yes, where can you register?
A: You can register on gov.uk here https://www.gov.uk/guidance/register-or-renew-your-money-laundering-supervision-with-hmrc

Q: Do these new requirement under the regulations only apply to sales of works of art or do they also apply to jewlery, luxury items, designer handbags etc… in other words, are the dealer and retailers such as e.g. Cartier, Rolex, Hermes etc… also concerned? A: The definition of an AMP is defined in the VAT Act, and applies to works of art rather than other luxury goods as you detailed. ——— Thank you for this answer. So there is no Money Laudering with Luxury Goods, Watches, etc… ? a 100k Rolex or Patek Philippe is much smaller and handier to carry around than a painting. Why does this law not concern this industry as well? If it does, can we benefit from their “best business practice”?
A: Although we’ll be publishing AMP guidance shortly you might like to look at the High Value Dealer guidance in the meantime https://www.gov.uk/government/publications/anti-money-laundering-guidance-for-high-value-dealers

Q: Does the record keeping not contravene GDPR?
A: No

Q: As an intermediary, do we need to run checks on both the customer and the seller?
A: if they are both your ‘customer’ then yes.

Q: Further to above question re: intermediary, is it correct that the seller (say a gallery who owns the work) would also need to identify the UBO and conduct check? Therefore the gallery would know the identity of the buyer, even with an intermediary.
[not yet answered]

 

Q: To confirm: we will need to see the orginal ID/Passport etc? There is a lot of business done abroad and via email etc. How do you suggest we can comply?
A: The guidance will include a section on electronic identification and the parameters for this.

Q: Can different transactions involving different sales/artworks but the same client be considered as linked transactions?
A: Yes this might be seen as linked transactions

Q: What can we expect when reporting a transaction to the NCA? How long can we expect to wait to hear back from them?
A: Depends on the report. Suggest you check the NCA website.

Q: At the start of the webinar, we were told that we have 1 year to implement the AML procedures. Is this correct? Or do we have to start this straight away on the 10th January 2020 with our clients?
A: You need to start from 10 Jan 2020 however we are aware of the short lead-in so will take this into account. Each case will be assessed on it’s own merits.

Q: In the regulations it lists things which might be considered “suspicious” and it says that the presence of one risk factor does not mean that is reason alone to perform EDD. Is it down to the AMP themselves to decide if a transaction is high risk enough to perform EDD?
A: Yes although you would be expected to demonstrate why this risk was not sufficient for EDD.

Q: Do you have any material on how best to organise a standard due diligence procedure? Template forms etc.
A: No, as all businesses are different we do not provide templates. However our guidance will set out the minimum you need.

Q: Hi. We have until 2021 to register, the regulations are effective 10 January 2020. When does our business need to begin the process? After registration or immediately?
A: You must comply with the regulations from 10 jan 2020 but you can register at any time between then and Jan 2021

Q: Do you have to do CDD on the seller or just the buyer
A: whichever is your customer, both if you’re an intermediary as they’re both your customer

Q: how do we register to get the emails from HMRC?
A: This will occurr when you register
MLRCIT@hmrc.gov.uk

Q: Do you have a full list of requirements that we need to obtain from our clients? I thought that this webinar would provide us with a list…
A: Not a full list as all businesses are diferent however our guidance will set our the minimum needed

Q: is there a “hotline” or email or contact from HRMC we can contact when we have questions or are unsure?
A: You can email mlrcit@hmrc.gov.uk

Similar Posts:

Share This