Can the art world clean up its act? This is the question that Jan Dalley attempts to find an answer to in the Financial Times.
As new regulations are being introduced, auction houses and art dealers across Europe are being forced to lift the veil of secrecy that has traditionally characterised the art world. Undeniably, this is a big change for a sector where historically there hasn’t been any kind of registration of ownership of artworks (“we don’t know for certain where even some of the most famous pictures are held, or who in fact owns them”, writes Dalley).
“The regulations that sent shockwaves through the art world” were introduced by the EU’s fifth Anti-Money Laundering Directive (AMLD5). AMLD5, which came into effect at a national level across the EU in January 2020, represented a response to the Panama Papers revelations of 2016 and the numerous money-laundering scandals that dominated newspapers headlines over the last few years.
As reported by the FT, “from now on, in the UK and across the EU — and in some other areas, such as Switzerland, that have voluntarily signed up — in any art transaction worth more than €10,000 the purchaser’s identity, address and other personal information have to be registered by the seller: passport details and the lot, just as if you were opening a bank account”. Interestingly, if it is a company or other corporate entity to be involved in the sales, standard Know Your Business (KYB) procedures are required, including the identification of the ultimate beneficial owners.
Jan Dalley remarks that “in many sectors this might seem like the kind of basic compliance that has been conducted for years, and with the same pretty fierce penalties for defaulters. But in the secretive art world it has landed like a bomb”.
However, these new requirements should not come as a surprise in the current global climate where governments and international bodies have consistently stepped up their efforts in the fight against criminal financial practices. Considering that anti-corruption watchdog Transparency International “estimates that murky transactions in the UK art world amount to many billions”, it would have been unthinkable for regulators to turn a blind eye on the issue.
If you’re looking for a trusted partner to help you meet the new AML/KYC requirements introduced by AMLD5, our team of experts will be happy to help. For an obligation-free consultation, contact us here.
The artworld isn’t the only sector regulators have started paying closer scrutiny to. For an overview of the growing scope of AML regulations beyond the traditional banking sector, click here.
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Last updated on March 9th, 2023 at 02:27 pm