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The new law applies to ‘Art Market Participants’ (AMPs) – auction houses, dealers or anyone trading in or acting as an intermediary in the trade of works of art that sell for above the €10,000 threshold.

They must be ready to implement measures ahead of the introduction of the European Union’s Fifth Anti-Money Laundering Directive, from January 10, 2020.

Register with HMRC

Companies will have to register with HMRC, risk assess their business and put policies and procedures in place ready for the directive (known as 5MLD). This includes verifying identities and conducting appropriate due diligence checks on buyers when they acquire items costing €10,000 or more.

The legislation also covers any lower-value ‘linked transactions’ that can add up to €10,000 or more, irrespective of payment method.

ATG understands that HMRC’s focus in the first year will be on the registration process for Art Market Participants (which will be staggered) and on encouraging auctioneers and dealers to understand the regulations and make good progress towards compliance.

It is expected that during this one-year registration period HMRC will take a pragmatic and reasonable approach to criminal proceedings under the new directive.

Given that details of the registration process and full guidelines have not yet been issued, it does not appear likely that HMRC will make prosecutions under the new regulations in 2020. HMRC has said that it will be carrying out compliance interventions to AMPs based on risk and there will be educational support and guidance to help AMPs meet their obligations.

HMRC told ATG that its website will be updated to include a new section specifically for AMPs and is organising a webinar on January 8, 2020, which will be recorded and hosted on the gov.uk website. Click this link to register for the HMRC webinar here. Detailed guidance will also be published later in January.

‘Working with BAMF’

An HMRC spokesperson said: “Our role is to support the businesses we supervise to meet their obligations under the regulations and protect themselves from being abused by criminals. To do that, we are working closely with trade bodies in the art sector.”

The British Art Market Federation (BAMF) has worked alongside HMRC and the Treasury drafting the guidance (due to be published) for the industry.

Art law consultant Tom Christopherson, auction house association SOFAA and online auction marketplace thesaleroom.com have also been involved in the process.

New systems to comply with the rules will be launched by thesaleroom.com, owned by ATG’s parent company Auction Technology Group. These will be in place by summer 2020 and plans can be viewed at atg.news/5MLD.

SOFAA held a meeting for members in September and dealer associations including BADA, LAPADA and SLAD have also issued briefings.

Christopher Battiscombe, director general of the Society of London Art Dealers (SLAD) and a member of BAMF, said: “Ahead of the formal guidance we have drafted our own guidance for members, setting out a reminder of their obligations, together with detailed guidance on how to go about fulfilling these obligations.”

For details on the 5MLD requirements visit:

atg.news/5MLD

gov.uk/topic/business-tax/money-laundering-regulations