What’s YOUR interpretation of new laws requiring art dealers to conduct CDD checks on collectors?

When speaking with art dealers at fairs, we’ve found that while many haven’t yet come across the legislation, others don’t think it will apply to them, even if they transact at the threshold of 10,000 Euros that triggers the need to comply. For the latter, many have been incorrectly informed by fellow dealers in addition to well-meaning speakers and advisers who convey out-of-date information.

Some common misunderstandings…

One art dealer recently replied in conversation that such checks will only be required for cash transactions of 10,000+ Euros.. which is incorrect. The reality is that the new Directive (to be transposed into UK law) broadens the scope of ‘obliged entities’ to include ‘art intermediaries’, who will be required to conduct AML checks for transactions of 10,000+ Euros, regardless of how payment is made. (It’s possible that this misunderstanding stems from terminology. The term ‘high value dealers’ in the previous EU Directive AMLD4 relates to cash transactions, and is separate to dealers being a type of ‘art intermediary’ as per AMLD5. In short, an ‘art intermediary’ is not a ‘high value dealer’.)

Another common misconception is that the legislation won’t apply in the UK after Brexit. This is yet another Chinese whisper making its rounds through the industry. HM Treasury made it clear in our consultation that the UK will adopt AMLD5, regardless of what happens in regards to the UK’s potential exit from the European Union. In a later conversation with HMRC, it was confirmed that AMLD legislation will apply, even if Brexit caused a delay in implementation.

At the time of writing, the initial stage of the industry consultation has concluded, and we await updates from the government. The white paper that will confirm what will be transposed into UK law on 10th January 2020 is expected to be published in December. In the meantime, much guesswork is taking place and Chinese whispers are flourishing. If you’re unclear about specific aspects of the legislation, get in touch. We’re regularly in touch with governmental officials and are happy to relay industry queries if not yet addressed.

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