Focus on new Anti-Money Laundering in UK market

Money laundering is the process of disguising the proceeds of illegal activity as legitimate funds. The art market, like many other high-value markets, is particularly susceptible to money laundering because art transactions can be opaque, and the value of art can be difficult to determine.

One common method of money laundering in the art market is to purchase a work of art with illicit funds and then "clean" the money by selling the artwork to a legitimate buyer at a higher price. This creates the appearance that the funds used to purchase the artwork came from the sale, rather than from illegal activity.

Another method is to purchase artworks with illicit funds, and then use the artworks as collateral for loans. This allows the launderer to get cash without selling the artwork and raising suspicion.

A third method is to use art dealers and galleries, as intermediaries, to facilitate the purchase and sale of artworks using illicit funds, in order to make the transactions appear legitimate.

The art market is also vulnerable to money laundering due to a lack of regulation and oversight. Unlike the real estate or financial sectors, there is no central institution or governing body responsible for monitoring transactions or identifying suspicious activity.

However, there has been increased attention and efforts to combat money laundering in the art market in recent years. In 2016, the European Union adopted the 4th Anti-Money Laundering Directive, which includes provisions for art market participants to identify their customers and report suspicious transactions. In the US, the Financial Crimes Enforcement Network (FinCEN) has issued guidance for the art market to help identify and report suspicious activity.

The United Kingdom has recently implemented new laws to combat money laundering in the art market. These laws, which fall under the Money Laundering and Terrorist Financing (Amendment) Regulations 2019, aim to increase transparency and accountability in the art market by requiring art market participants to implement due diligence measures.

The new laws apply to a wide range of art market participants, including art dealers, auction houses, and dealers in valuable goods such as antiques and collectibles. These participants are now required to implement customer due diligence measures, including identifying the beneficial owners of artworks and assessing the risks of money laundering and terrorist financing.

Additionally, the new laws impose reporting obligations on art market participants in certain circumstances, such as when they suspect or know that a transaction involves proceeds of criminal activity.

The UK government has also established a new supervisory body, the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), to oversee the implementation of the new laws and to ensure that art market participants are in compliance.

The art market is a major global industry, with billions of dollars in sales each year. However, it has also been identified as a high-risk sector for money laundering and other illicit financial activities. The new laws in the UK are a significant step forward in addressing these issues and ensuring the integrity of the art market.

The implementation of these new laws is an important step in the fight against money laundering and the illicit financing of terrorism, and it will help to increase transparency and accountability in the art market. It will also help to protect the UK's reputation as a leading art market and a destination for art collectors and enthusiasts from around the world.