Do you think that you – or a colleague, are not caught as an Art Market Participant (“AMP”) because you or they are only acting as an introducer in transactions? If taking an active role, including an introductory one, and receiving financial value, the activity has a high likelihood of falling under the definition of AMP.
Let’s start with the official definition of an Art Market Participant.
(ii) is the operator of a freeport when it, or any other firm or sole practitioner, by way of business stores works of art in the freeport and the value of the works of art so stored for a person, or a series of linked persons, amounts to 10,000 euros or more.“
What does “by way of business” mean?
The BAMF Guidance (updated June 2022) explains.
HMRC has provided further clarification.
In summer 2021, ArtAML addressed the distinction between intermediary and introducer in regular conversations with HMRC as regulator for AMP businesses. This was based on anonymised, real-life examples provided by ArtAML.
The conclusion was that introducers were operating as intermediaries if:
- an introduction was made with specific works of art in mind (to buy or sell).
However, they would not be caught if only a general introduction was made :
- “X collector meet Y gallery / auction house, you could probably do business together. By the way, Y, some introducer’s commission would be appreciated if any business results.”
When else would an introducer not be caught as an AMP?
It’s possible that they facilitate an introduction between two parties and take a consulting fee that is not directly related to a transaction. The key difference is not having derived financial value from ‘relevant activity’, i.e., a transaction of works of art totalling 10K+ EUR in which they’re involved.
If an introducer is truly not operating in the art market and such introductions are only a small fraction of business conducted, it could even make sense to restructure the business model to not take introductory fees for helping to facilitate art sales, but to work on a consulting basis with clients. In this instance, the introducer might be paid for time, and not on the basis of a transaction proceeding (noting that it’s paramount that any fee does not directly correspond with a transaction). For those introducers operating as art market professionals and for whom this is a key income stream, it’s time to bite the bullet and register as an AMP.
Take heed: Not only could you be subject to a penalty for late registration, it is against the law to be involved as an AMP in transactions of 10K+ EUR in works of art.
While it’s not been obvious to the sector that ‘introducers’ might be caught as AMPs, the latest BAMF Guidance indicates otherwise (with potential exclusions for those not transacting by way of business). If you or colleagues are in this situation, it’s prudent that you look at your individual situation to make any necessary changes, whether that’s registering as an AMP or changing model if you’re not actively working in the art market – and taking independent legal advice if deemed appopriate. Rest assured that adhering to the ML Regulations does not mean a stop to business: it requires education to learn how to take a risk-based approach and build this into your sales process.
Feel free to get in touch for clarification on your own situation and to find out what to do next if you need to register.
This blog post was updated 2nd March 2023 to expand upon “by way of business”.