There are many individuals dealing in art who don’t yet realise that they’re Art Market Participants (“AMPs”) according to the Money Laundering Regulations (UK).
Some surprising yet frequent examples include:
– Interior designers
– Art advisors / consultants whose commission falls under 10,000 Euros
For the time being, the following professionals are excluded*:
– Artist estates
* At the time of writing, a consultation with HM Treasury is underway to determine if some artists might fall in scope. If the full exclusion is to change, we expect that to take place in spring 2022.
Going directly to the horse’s mouth – in this case, the Amendment no. 1511 (2019) to the Money Laundering Regulations (2017), the definition of an Art Market Participant means:
“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.”
Turning to the point about interior designers, consider this explanation from HMRC’s Risk Guidance (published 28th June 2021):
“An interior designer could be an AMP, as they could be acting as an intermediary. This would depend on what the interior designer’s working agreement is with their customer. If the interior designer is buying the art on behalf of their customer, they will have to declare who their customer is to the selling AMP, so they conduct the correct CDD.”
As for art advisors:
It’s not the amount being received for commission, but the transaction value itself that is relevant. Therefore, if the item/s being transacted is/are ‘works of art’ according to the VAT Act 1994 (Section 21 (6)) and you’re operating as an intermediary, you’re caught.
The above makes the following statement from HMRC’s risk guidance of paramount importance:
“As part of your CDD measures, if you are dealing with another AMP you should check on GOV.UK whether the business is registered with HMRC for AML supervision. If not, you should not continue dealing with that AMP. You should consider reporting this activity to the National Crime Agency (NCA) via a SAR. Reporting should also be made to HMRC (https://online.hmrc.gov.uk/shortforms/form/CusConf_InformB) on GOV.UK.”
Note that HMRC endeavours to turnaround AMP registrations within 45 days of submission. However, there can be delays, and this also means that there is a lag between submitting the application and being approved – a judgement call will need to be made if you’re dealing with someone who should be registered and is awaiting AMP confirmation. There can also be a waiting period between an AMP being approved and being listed on gov.uk.
If you or someone you know needs to register as an Art Market Participant:
See our HMRC Registration Guide.
If you’re involved in multi-AMP transactions:
Please read our article on reliance as there has been a lot of misunderstanding. It doesn’t enable business as usual and is intended to reduce hassle for collectors.