The British Art Market Federation (“BAMF”) Guidance was updated for UK Art Market Participants (“AMPs”) on 6th February 2023. HM Revenue & Customs (“HMRC”) as regulator sent an email update with key changes to AMP businesses registered for supervision.
The list of those changes is copied below and several points are expanded upon.
Download the BAMF Guidance here.
Changes made to the Guidance:
- Throughout references to proliferation financing have been added in and definition on page 31
- Para 19 regarding artists – ‘intended to be’ has been removed
- Para 48 last bullet point – added in just for a ‘business relationship’
- Para 51 last sentence – added in ‘relevant’ to give more clarity
- Para 56 for both examples added in ‘for example’
- Para 5.55 have removed ‘for the purpose of CDD’ to read better
- After para 5.86, title amended from ‘AMPs to ‘entities’
- 5.93 and 5.94 (as well as tweaks to 5.130 and 5.146) – changes for Reg 30A
- Para 5.198 and 5.213 added in ‘as amended’ after 4MLD
Para 19 regarding artists – ‘intended to be’ has been removed
19. Artists selling their own work, whether as an individual/sole practitioner or through a business they own, are not within the scope of the MLRs, and so are not required to register as an AMP. This extends to sales of an artist’s own work through their business, which only sells their work (but not for sales of other artists’ work if also sold through their business). Similarly, sales out of an artist’s estate, or sales of an artist’s work by someone employed by the artist, or the artist’s business, to sell the artist’s work, are not within scope of the MLRs.
Para 48 last bullet point – added in just for a ‘business relationship’
48 An AMP’s policies and procedures must include:
• The risks of ML/TF identified in the risk assessment
• The responsibilities of senior management and all employees in relation to anti-money
• CDD measures – including identification and verification requirements, identification of
customers or beneficial owners who are Politically Exposed Persons (PEPs) or family members or close associates of PEPs, timing of CDD and the exercise of discretion on risk based aspects
• Suspicious activity reporting procedures
• Internal control procedures, including cash and third party payment handling
• Use of reliance or outsourcing arrangements
• Ongoing monitoring activities for business relationships
Para 51 last sentence – added in ‘relevant’ to give more clarity
51 The type of training given should be appropriate to specific employees, so that they are properly equipped to deal with the particular risks that they come across when fulfilling their responsibilities. For example, customer-facing staff registering or dealing with new customers should be trained on conducting CDD measures, including awareness of the possibility of forged documents. Those handling payments should be trained to identify third party payments and red flags (for more information on red flags, see Part II, paragraphs 4.21-4.22) relating to the origin of funds. All relevant employees should be trained on how to spot red flags and on the obligation to report suspicions to the AMP’s nominated officer.
Para 56 for both examples added in ‘for example’
56. The customer of an AMP who is selling or acting as an intermediary in the sale or purchase of a work of art, will be whoever is paying the AMP for the artwork, or for services in relation to the transaction (see examples in Part II, paragraph 5.21).
For example, in a transaction involving an AMP who is an art dealer
• when the dealer is selling their own stock the dealer’s customer will be the person, or other AMP, who is paying the dealer for the work of art.
• when taking a work of art for sale on consignment, the dealer’s customers will be both the seller and the buyer.
For example, for an AMP who is an auction house, the customer will be:
• the seller of a work of art, or other AMP, who has paid the auction house, to
auction the work of art
• the purchaser, or other AMP, who has paid the auction house for the work of
Para 5.55 have removed ‘for the purpose of CDD’ to read better
5.55 A customer’s identity consists of a number of aspects, for example the customer’s name, current and past addresses, date of birth, place of birth, physical appearance, employment and financial history, and family circumstances.
After para 5.86, title amended from ‘AMPs to ‘entities’
Other entities that are subject to the MLRs (or equivalent)
5.93 and 5.94 (as well as tweaks to 5.130, 5.146) – changes for Reg 30A
Regulation 28(3)(b) 30A(1)
5.93 An AMP must take reasonable measures to determine and verify the law to which the corporate is subject, and its constitution (whether set out in its articles of association or other governing document).
Prior to 1 April 2023, before establishing a business relationship with an entity listed in (a) – (e) below, an AMP must collect proof of registration or an excerpt of the register from the company, the unregistered company, the limited liability partnership (see paragraph 5.130) or the trust, (see paragraph 5.146) or from the registrar (in the case of an eligible Scottish partnership – see paragraph 5.130). The entities referred to are:
(a) a company subject to the requirements of Part 21A of the Companies Act 2006;
(b) an unregistered company which is subject to the requirements of the Unregistered Companies Regulations 200928
(c) a limited liability partnership which is subject to the requirements of the Limited Liability Partnerships (Application of Companies Act 2006) Regulations 200929
(d) an eligible Scottish partnership which is subject to the requirements of the Scottish Partnerships (Register of People with Significant Control) Regulations 201730
(e) a trust which is subject to Part 5 of the ML Regulations
From 1 April 2023, before establishing a business relationship with an entity listed in (a) – (f) below an AMP must collect an excerpt of the register which contains full details of beneficial owners held on the register at the relevant time before the business relationship is established, or must establish from its inspection of the register that there is no such information held on the register at that time. The entities referred to are:
(a) a company subject to the requirements of Part 21A of the Companies Act 2006;
(b) an unregistered company which is subject to the requirements of the Unregistered Companies Regulations 200931
(c) a limited liability partnership (see paragraph 5.130) which is subject to the requirements of the Limited Liability Partnerships (Application of Companies Act 2006) Regulations 200932
(d) an eligible Scottish partnership (see paragraph 5.130) which is subject to the requirements of the Scottish Partnerships (Register of People with Significant Control) Regulations 201733
(e) a trust which is subject to Part 5 of the ML Regulations (see paragraph 146)
(f) an overseas entity which is subject to registration under Part 1 of the Economic Crime (Transparency and Enforcement) Act 202234
Regulation 30A(2)(3) Schedule 3AZA
5.94 If an AMP finds a material discrepancy (either when carrying out CDD or in the course of ongoing monitoring) between information relating to the beneficial ownership of a customer which is a company, an unregistered company, a limited liability partnership or an eligible Scottish partnership (see paragraph 5.130), a trust (see paragraph 5.146), or an overseas entity, it must be reported to the Registrar of Companies (or to HMRC in the case of a trust). In reporting material discrepancies to the Registrar of Companies, AMPs should have regard to guidance issued by Companies House35. A material discrepancy is one which may reasonably be considered to be linked to money laundering or terrorist financing, or to conceal details of the business of the customer, and which is in the form of:
(g) a difference in name;
(h) an incorrect entry for nature of control;
(i) an incorrect entry for date of birth;
(j) an incorrect entry for nationality;
(k) an incorrect entry for correspondence address;
(l) a missing entry for a person of significant control or a
registrable beneficial owner;
(m)an incorrect entry for the date the individual became a