Introducers vs. Intermediaries: Are you caught as a UK Art Market Participant?

February 10, 2023
by ArtAML™ Team

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.

The ML Regulations state in 14(1)(d) that an AMP is:
“a firm or sole practitioner who
(i) by way of business trades in, or acts as an intermediary in the sale or purchase of, works of art and the value of the transaction, or a series of linked transactions, amounts to 10,000 euros or more; or

(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?

There is no definition by law or in official guidance for art market participants. This indicates that the UK government has left this to interpretation by businesses.
When the topic of charities potentially being caught as AMPs has been discussed with trusted sources, it has been suggested that those transacting over the threshold in works of art and are doing so as an additional income stream upon which they do not rely are not caught. Conversely, if such transactions are a core revenue stream without which the business would not exist, the conclusion has been that they are indeed transacting in works of art “by way of business”. Note: based on our experience, the trading arms of charities might be caught, even if that legal entity sits under the charity.
This same thinking might be applied to individuals acting as introducers. Ask yourself this: Are such introductions a core income stream, or are they a rarity sitting outside the core business – a bonus from time to time, if you will?
If you’re an introducer (or a charity for that matter) and think that you’re not transacting by way of business, you’re urged to take independent legal advice.

The BAMF Guidance (updated June 2022) explains.

It states in Part 1, page 8:
“13. The term ‘intermediary’ is not further defined in the MLRs. Drawing on the wording of Regulation 14, an ‘intermediary’ would be someone who, by way of business, actively transacts in the sale or purchase of works of art on behalf of a seller or buyer under whose authority they act.
“14. An intermediary could therefore be an agent or an art dealer, which could include an art gallery, auction house or an online sales platform. An intermediary could themselves be such an entity, or might simply be a person or entity paid by the seller or buyer for whom they act.”
Also from page 9:
“18. Introducers are only within the scope of the MLRs if they receive a financial value which directly relates to their active participation in the transaction (sale or purchase) of that work of art. See also paragraph 5.212 in Part II.”

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.

In Conclusion

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.

How can we help?

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