How do you conduct AML at an art fair?

September 16, 2022
by ArtAML Team

Before anti-money laundering became a reality for art businesses, ArtAML founders Susan J Mumford and Chris King were asking and addressing the question. Such events can be a crucial activity for galleries and dealers (see the Art Basel annual reports for statistics on this), so working out how to effectively comply while not jeopardising business opportunities is important.

It’s not a walk in the park…
Conducting AML customer due diligence at a fair presents a challenge for multiple reasons. These range from the buyer not having proof of address on them to the venue having poor wifi signal. This is not to mention having a lack of time, when your focus is selling.

An idea for businesses with a team:

The team member who meets the customer face-to-face on the stand can get the ball rolling by either starting the process with just a photo ID OR they can hand the full computer-based process to the colleague off-site.

Either way, the ‘selfie scan’ might not be deemed necessary (unless any potentially suspicious activity is detected), as the team member on the stand can look at the ID provided and determine if that is the same person they met.

The customer can later provide the proof of address to the person who is doing the AML check.
>> Note: the proof of address can be securely sent via ArtAML using the ‘Document request’ feature.

An idea for micro businesses:

In this scenario, it is only the business owner who is involved with the AML process. It likely makes the most sense to do the AML process off-site, either in the evening or morning during the fair – if not the following week. As above, the ‘selfie scan’ might not be deemed necessary if the customer has been met face-to-face.

Several important notes…

 
Deposits:

While ArtAML asked the UK’s HM Treasury about deposits during the 2019 consultation and have since discussed this important aspect of closing sales at fairs, there continues to be no official response. This being the case, taking a risk-based approach is paramount. One solution that we’ve come across is taking deposits below the value of 10,000 EUR, providing there are no detected risks. This balances compliance adherence with the continuation of business activity.

When customer due diligence needs to be completed:

While there is no black and white stance on when an invoice is sent for Art Market Participant businesses (i.e., before or after an AML check), what is clear is that AML needs to be completed before fulfilment, i.e., when the art is collected / sent. CDD involves both “KYC” (Know Your Customer) and transactionally-related considerations, which is sometimes referred to as the “AML” part.
>> In the ArtAML platform, these are composed of the ‘Customer’ and ‘Transaction’ modules. Be sure to complete both parts for a new customer, noting that it’s best practice to do both if it’s been more than a year since transacting with the customer, their ID has expired / been replaced or, necessarily if there is any potentially suspicious activity detected.Might simplified due diligence be an option?

See our blog post.

Summary:
We’re not going to pretend that complying with AML at art fairs is easy. However, it is feasible – and considering the best approach for your business in advance could pay dividends, quite literally.

How can we help?

Get in touch with our team for support and advice