- February 1, 2023
- Posted by: FCS Compliance
- Category: Blog, News
By Rena Neville – Lead AML Consultant, FCS Compliance – Art Division
Top 5 Most Frequently Asked Questions – Art Market Participants
Anti-money laundering (AML) expert Rena Neville answers the top five most frequently asked questions put to FCS Compliance in 2022 for the art market:
1 Is an AMP obligated to comply with the UK ML Regulations even if the AMP sells a work of art to a person or entity located outside of the UK, such as when attending a fair abroad?
Yes, transactions worldwide made by a UK AMP are governed by the UK ML Regulations. Of course, the transaction must be: made in the course of business, or as an intermediary, in connection with a qualifying work of art, for a total purchase price of €10,000 or more, in a single or series of linked transactions. This means that UK art market participants must comply with the UK ML Regulations, as well as the sanctions imposed by the UK, even when conducting transactions abroad.
2 Are we required to check if another AMP is registered with HMRC?
The short answer is yes. HMRC removed any ambiguity around this question in 2021 when it specifically confirmed that when an AMP conducts a qualifying transaction with another AMP, each AMP is required to check HMRC’s supervisory registry to see if the other AMP is registered.
Unfortunately, the registry does not include parties who have applied but not yet been approved for registration and there is a delay between application and approval. Thus, if an AMP is not listed on the registry, one should ascertain if they have applied for registration in which case, one may still transact with them.
If the AMP is not registered and has not applied for registration, consistent with HMRC Guidance, you should not deal with the AMP and you should consider reporting them to HMRC and to the National Crime Agency by filing a suspicious activity report.
3 What are acceptable documents for proof of address?
One may not use the same form of identification for both the client’s name and address. Thus, if a passport or driver’s license is being used for name identification, then we recommend requesting one of the following as proof of residence, provided it is not more than three months old: a utility bill, council tax bill, bank or building society statement, mortgage statement, tax demand, or a driving licence (provisional is not acceptable).
It is worth noting that a driving licence cannot be used for both identification and proof of address. Clients regularly offer to provide Doctor’s letters, credit card statements and mobile phone bills, but none of these constitutes an acceptable proof of address.
4 What customer due diligence documents are required to identify an Estate as a seller of a work of art?
You may ask for a copy of the court document approving the appointment of a personal representative, such as the Grant of Probate (in the case of a will) or Letters of Administration.
However, if it appears that there is a delay in obtaining the Grant, then a copy of the death certificate and the deceased person’s will may suffice. Grants of Probate and Letters of Administration identify the personal representative, and this is the individual on whom CDD should be conducted.
If the personal representative is from another regulated sector, such as a solicitor or accountant, then simplified due diligence may be appropriate. This would require verifying the person is in fact on the solicitors/accountants register and in good standing. Of course, if a red flag arises, SDD would not be appropriate.
5 What AML requirements are there for companies?
In the first instance, you need the following company documents and you will need to request the most up-to-date share register to see where the ultimate beneficial ownership (UBO) lies.
The UBO may not necessarily be the directors of the company. If the beneficial owner of the company is another company, you will need all of the company records as shown below for every organisation that forms part of the company structure.
• Certificate of Incorporation
• Memorandum & Articles of Association
• Copy of current share register/register of members
• Confirmation of registered office and trading address (if different)
• List of directors
In addition to the above, you will also need documentation for the UBO who is the main shareholder which you should find from the share register/register of member’s document.
A UBO is any shareholder that has more than 25% of the shares in the company. If no person holds more than 25% shares in the company then there will be a person with significant control (PSC) this will be available to see on the PSC register at Companies House and customer due diligence checks will therefore apply to the PSC.
Get in touch with us if you would like any help or support on this topic by clicking here.