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            The Art of Money Laundering

            The Art of Money Laundering AML by Veriphy
            Will the New Money laundering Regulations Affect You?
            January 8, 2020
            The Regulation of Cryptocurrency - Veriphy
            The Regulation of Cryptocurrency
            January 21, 2020
            The Art of Money Laundering AML by Veriphy
            Will the New Money laundering Regulations Affect You?
            January 8, 2020
            The Regulation of Cryptocurrency - Veriphy
            The Regulation of Cryptocurrency
            January 21, 2020

            New AML Regulations expand scope of obliged entities to include art dealers

            Money Laundering Update- Art Dealers Now Obliged Entity

            New AML regulations, The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 came into effect on the 10th January 2020 to combat the global issue of money laundering and terrorist financing.

            Under this update, & for the first-time “art market participants,” will be required to comply with anti-money laundering legislation.

            What does this mean practically? It means you will be required to register with an AML supervisory board, conduct a risk assessment, appoint a MLRO, document your aml policies & procedures including your SAR internal processes & conduct staff training.

            A good place to start in understanding your general AML obligations is Veriphy’s Pillars of AML Compliance Guide.

            What you need to know – A quick overview for the Art Sector

            Art traders conducting business within the UK are now classed as ‘regulated’ for the purposes of AML compliance. This new label requires “art market participants,” to conduct due diligence when partaking in transactions with values over 10,000 Euros (around £8,500).

            As regulated entities, art market participants must register with a supervisory body for the purposes of AML supervision. For the art sector, the relevant body is HMRC. The regulations state that you must register within the next 12 months of the regulations taking effect.

            Under new AML regulations, you will be required to adopt a ‘risk-based’ approach. This means you must identify, assess and understand the risks to which your trading is exposed to potential money laundering and take appropriate AML measures to commensurate to those risks to mitigate them effectively.

            • You will be required to carry out Customer due diligence (CDD). This is the process whereby you collect relevant & appropriate data surrounding your client/customer before engaging in a business relationship or high-value transaction. It is part of general AML procedures which include identity verification, address verification and a screen against the PEP & Sanctions lists.
            • In some circumstances where the risk is determined to be relatively high, enhanced due diligence (EDD) is required. This could include, but is not limited to;
              • Obtaining additional information on the client,
              • Identifying the clients/customers source of funds
            • The need for Enhanced due diligence is normally triggered by but is not limited to;
              • A client in a 'high-risk' country
              • A client who is a PEP
              • No face to face interaction with the client
              • If you have any doubts about the nature of the transaction

            NOTE: The new AML regulations state, as an obliged entity, that you will have to retain your CDD records for up to 5 years.

            Other requirements include carrying out a risk assessment, the implementation of documented AML policies and internal procedures, appointing an MLRO & conducing and keeping record of the AML training of your staff.

            Other Useful Resources

            The Responsible Art Market (RAM) has produced an excellent toolkit explaining art transaction due diligence which can be found here.

            How can Veriphy help?

            Once registered with your supervisory board, we can help create the foundation of your internal AML policies and procedures; specifically, your AML policy, training & customer due diligence obligations.

            The new money laundering regulations are a mandate for electronic verification methods – the 5th EU directive states they should be used “wherever possible” to reduce fraud and the potential human oversight which can often occur with manual document checking.

            Register for free to prepare for the new AML regulations.
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