- January 4, 2023
- Posted by: FCS Compliance
- Category: Blog
Find out more about the AML experts at FCS. In this interview, FCS PR Director, Alison Blease introduces you to Paula Trommel…
I’m delighted to be joined today by Paula Trommel, Senior AML consultant for FCS Compliance’s new Art Division. Welcome!
Hello, thank you for having me.
I believe you’re in Milan at the moment?
Yes, I’m here working with a client. Although most of our clients are based in the UK, a significant number of them are transacting globally. More recently we have seen an increase in clients based in the US and across Europe.
I hear you speak quite a few languages which must come in handy.
German is my native language, but I speak French, Italian and of course English too.
Along with my passion for languages, I have a background in legal, compliance and art – specialising in anti-money laundering (AML) legislation and how it applies to the art market both in the UK and in different jurisdictions across Europe.
That’s seriously impressive! Tell me a little about your background. How did it all start?
I grew up in the art world – my parents are art dealers – and studied in the UK before joining Christie’s Legal and Compliance Department. This is where my interest in the link between anti-money laundering and the art market was sparked.
From there, I moved to the Financial Conduct Authority (FCA), the UK Regulator, which gave me an insight into how the Government approached AML and the art market. At the FCA, I was responsible for the investigation of financial crime cases, including money laundering.
And while there I was seconded to the Fine Art Group, again focusing on AML.
Having first-hand experience with AML practices from both the public and private sectors has given me a unique art market skill set which I use now in my day-to-day work.
It sounds as though some art organisations could see what was coming down the line and wanted to get ahead of the game.
Yes, definitely. But even for those “early adapters”, organisations that began to put AML measures in place back in 2020, it’s now critical that they update their programmes, particularly in light of the updated Government Guidance which came out in Summer 2022.
However, there remain quite a few art market participants (AMPs) who are not yet registered or compliant. And for some galleries, this has proved to be a bit of a wake-up call. We have been contacted by some that have been fined for failing to register, simply because they were unaware that they needed to do so.
A number of these AMPs said that neither their accountants nor their lawyers had told them that the art market now fell under AML legislation.
Fortunately, for many clients we have been able to help set up AML programmes at relatively short notice and before HMRC in-person visits have been made.
After your secondment, did you return to the FCA?
I did return to the FCA, and am grateful for that experience, which was wonderful. However, shortly after returning, I realised that what I really enjoyed was applying my regulatory and legal know-how to the practical, day-to-day challenges faced by the art market. It became clear to me that what I wanted to do was to work in the private sector and build on the amazing opportunities I had had at the FCA and at Christie’s too.
Was it around this time you met Rena Neville – (Lead AML Consultant, FCS Art Division)?
It was. A mutual friend actually introduced us. By then Covid had hit the country – in fact, much of the world was in lockdown. Rena and I used to go for regular lockdown walks and that’s when we began talking about working together. We had a shared experience of the art and legal worlds and both of us had worked extensively on AML projects. We knew that art organisations were going to need help in implementing the new (at the time) legislation and hoped that our shared experiences would be of value to the Art Market.
With Corinth Consulting, I gained extensive international experience in designing and implementing compliance and anti-money laundering programmes.
And as you mentioned earlier, your parents are both art dealers. Did you use them as a bit of a sounding board?
I did! I wanted to know from them how they thought the legislation might impact their business and get a sense of whether they understood what they needed to do to be compliant. I felt they were representative of the wider Art Market and the challenges coming their way.
All of this led to you and Rena setting up Corinth Consulting – a specialist company dealing with AML and the art world. Two years on from the EU Directive becoming law and I’m guessing you’ve been busy!
Very busy! And becoming a part of FCS Compliance has really helped. Rena was approached by FCS over a year ago and we could see great potential for both parties.
The FCS team has an extensive law enforcement background gained from working for some of the country’s leading police forces. In setting up FCS they had established smooth running systems for training, policy and procedures and Client Due Diligence (CDD). But their focus was largely on the UK property market, which became regulated well before the art world. They contacted Rena and I as they were keen to build an art division within the company and they knew this was our area of expertise.
Our priority has always been to offer AMPs a complete service. So beyond AML programmes and training, we have set up a hotline to answer any immediate questions clients may have. At the other end of the scale, we offer in-depth assistance with HMRC queries or in-person visits and we can help with CDD too. The partnership with FCS started during the Summer of 2022 and we haven’t looked back.
What does work look like for you on a day-to-day basis?
It really does vary depending on the client. Some simply need a refresh of their AML programmes, while others are starting from scratch and need everything from training to policies. Other clients require specific transactional advice and additional help with their CDD.
This past year was incredibly busy helping AMPs understand how to comply with sanctions and bans introduced following the Russian invasion of Ukraine.
Auction houses are obviously one of your clients, but who are the others?
Yes, both local and international auction houses, as well as local and international galleries, and we work with private art dealers and art advisers. We also have an increasing number of part-time consultants retained by the bigger organisations who themselves also fall within the scope of the Regulations.
We saw in the property market, how the regulators were supportive during the initial implementation of the EU Directive, but have over time taken an increasingly tough stance against those who aren’t compliant. Is this your experience in the art world too?
It is. The regulators are shifting into the next phase from educator to enforcer and are taking a closer look at the art market. As I mentioned earlier, we regularly hear from AMPs who have received fines for failing to register with HMRC.
I’m afraid to say that, based on our market knowledge, we expect to see a steady increase in the number of AMPs being published on HMRC’s “name and shame” lists for not complying with money laundering regulations this year.
Is there a common mistake you see AMPs and arts organisations making on a regular basis?
I think the most common error we see is over-reliance on tech platforms as a quick-fix solution to being compliant. Such platforms are great tools for running a name through a database and alerting a client to red flags, but this is just the beginning of the process.
Most fines in the banking sector come not from a failure of tech tool red flag searches, but from a failure to act on them. One would be mistaken in thinking that ticking the boxes of compliance is enough. But the secret to a successful programme is not just having policies and procedures in place but ensuring staff and senior management truly understand AML in its entirety and this means not just identifying red alerts, but knowing how to act on them too.
And the art world is complicated by it being a truly international sector.
It is – and that’s what keeps it interesting!
Thank you for your time today Paula, it’s been great talking to you.
Thank you!
