OFSI Sends a Stark Warning to the UK Art Market

Is the UK art market turning a blind eye to financial sanctions?

Is the UK art market turning a blind eye to financial sanctions? – This is the damning implication of the Threat Assessment issued by the UK’s Office of Financial Sanctions Implementation (OFSI), specifically addressed to the Art Market. The Threat Assessment, aimed squarely at Art Market Participants (AMPs) and High Value Dealers (HVDs), states that it is “highly likely” that works of art owned by sanctioned individuals remain undisclosed in the UK.

With the new reporting obligations that came into force as of May 2025, this publication serves as both a wake-up call and a warning shot: OFSI is watching, and non-compliance is a criminal offence.

“This is not just a compliance update — it’s a clear signal that OFSI believes the art market is not doing enough. Reporting failures are not only reputational risks — they are criminal offences.” – Rena Neville, Head of Art Division, FCS Compliance

What Does the OFSI Threat Assessment Say?

OFSI’s June 2025 report highlights a glaring disconnect. While banks and legal firms have submitted numerous ‘suspected breach’ reports regarding the storage of art by sanctioned parties,  AMPs themselves have submitted “significantly fewer than expected.”

This low level of reporting is particularly concerning given:

• The Art Market has been warned repeatedly by HMG about the risks of both short-term and long-term storage of works of art owned by sanctioned parties. – First in 2024 by the National Crime Agency (NCA) and most recently by OFSI.
• The Art Market is subject to mandatory reporting obligations as of May 2025, and breaches are subject to civil or criminal consequences, including up to six months behind bars or a £1 million fine.

AMPs have been suitably warned, so it is unlikely the Government will be forgiving of breaches.

Not Just Russia

The Threat Assessment also warns the Art Market that the risks do not just stem from the Russian sanctions imposed following the Ukrainian invasion. There are also financial sanctions imposed in the UK on certain countries, administrations or terrorist groups.

AMPs should also stay alert regarding threats posted by these other groups, as well as individual parties outside of Russia. 

New Rules You Need to Know (As of May 2025)

AMPs must report to OFSI as soon as practicable if they know or have reasonable cause to suspect that someone:

• is a designated person, or
• has committed breaches under UK regulations.

Failure to report on this is a criminal offence.

The Risk Is Real: OFSI’s “Key Judgements”

OFSI’s official position is clear:

• It is highly likely that works of art owned by Designated Persons are not being reported.
• It is likely that Russian DPs and their enablers have breached UK sanctions through transactions in the UK art market.

These are no longer abstract risks. The Art Market’s global nature, its traditional opacity, and the storage of works of art make it a prime target for sanctions evasion.

Red Flags You Should Not Ignore

OFSI lists numerous red flags AMPs should be actively screening for, including;

• sellers, buyers or their agents who have links to sanctioned jurisdictions,
• a counterparty refusing to provide information, particularly in relation to know-your-customer (KYC) checks, without reasonable justification,
• counterparties, particularly sellers, attempting to rush or delay a transaction while failing to engage with KYC checks.

If you see any of these red flags, then it’s time to escalate.

FCS Compliance Can Help

Whether you’re unsure what triggers a report to OFSI, how to manage high-risk clients, or how to embed sanctions checks into your CDD process, our expert team can support you.

FCS Compliance – Art Division is led by Rena Neville, who specialises in helping AMPs navigate the intersection of AML and sanctions obligations. From health checks and policy reviews to tailored consultancy and training, we provide practical, sector-specific advice that keeps your business protected and compliant.

Don’t Wait Until It’s Too Late…

If you have questions about what to report – or even whether you should report – now is the time to act. Contact the team at FCS Compliance for tailored guidance and support.