Risk guidance published by HMRC (June 2021) highlights the importance of identifying if funds have come from a high jurisdiction.

Why is this important?

According to the risk guidance:

Such locations are “more likely to be linked to money laundering and terrorist financing.”

In practical terms, this means that it’s important to identity to identify the ‘source of funds’ and associated jurisdiction.

Top tip: ‘Source of funds’ (SoF) is different to ‘source of wealth’ (SoW). Whereas the former (SoF) is the origin of the payment – such as a bank account, the latter (SoW) is how the money was attained  – for example, inheritance, investments and salary.

The ArtAML platform automatically checks for high risk jurisdictions in association with:

– Residential address (for private individuals and the UBOs of companies)
– Registered address (for companies)
– Source of funds (for all types of customer)
– Reliance partner (the Art Market Participant or regulated business upon whose AML checks you’re relying)

If a high-risk jurisdiction is identified in our platform, a red flag is raised, which triggers conducting Enhanced Due Diligence. You will need to take a risk-based approach based on information related to the transaction, in context of the risks your own business faces of being a target of ML/TF activities.

Not yet using ArtAML for compliance checks? Or need to do a manual high-risk jurisdiction check?

Review the current lists of high risk jurisdictions via the following links.

UK list of high risk jurisdictions
EU list of high risk jurisdictions
USA list of high risk jurisdictions
USA jurisdictions with increased monitoring

Before you start your search, note that the HMRC risk guidance also states:

“It is not only the country that the customer is based in that may be the risk, it could also be neighbouring countries as money laundering or terrorist financing often involves the movement of funds across borders.”