- August 8, 2025
- Posted by: FCS Compliance
- Category: Art Market, News
Following an 18-month consultation on improving the effectiveness of the UK’s Money Laundering Regulations (MLRs), HM Treasury has issued its response. The response, published in July 2025, provides a roadmap of the amendments to the UK MLRs that are likely to be implemented, and what additional guidance the art market should expect from its supervisor, HMRC.
In this article, we will highlight some of the upcoming regulatory changes that have been recommended and the guidance the art market may be receiving from HMRC.
There are two main points of interest for Art Market Participants (AMPs), both of which should make it easier for them to comply with the UK regulations:
- Threshold changing from 10,000 Euros to 10,000 Pounds
- Reduced number of high-risk countries requiring Enhanced Due Diligence (EDD)
Threshold changing from Euros to Pounds
The response recommends that the €10,000 threshold triggering compliance with the UK Money Laundering Regulations should be amended to GBP. The recommendation is that the “10,000” amount should remain, but the currency should change from euros to sterling, making the new threshold £10.000 if the recommended changes are implemented.
This welcome change would remove the step of converting pound transactions to euros to determine whether the transaction is within the scope of the UK MLRs. This change would also have the practical effect of slightly increasing the threshold for transactions that qualify as relevant, (at the time of writing this article €10,000 equates to only £8,677).
For reference, below is the current criteria that triggers compliance with the UK MLRs for AMPs:
- An operator of a freeport storing works of art valued at €10,000 (soon to be £10,000) or more for a person or series of linked persons; or
- A firm or sole practitioner who, by way of business, trades or acts as an intermediary
- In the sale or purchase of a work of art, defined below as
- a value or total purchase price of €10,000 (soon to be £10,000) or more,
- a single transaction, or a series of linked transactions.
- a value or total purchase price of €10,000 (soon to be £10,000) or more,
- In the sale or purchase of a work of art, defined below as
Reduced number of high-risk countries requiring Enhanced Due Diligence
The consultation response also includes a recommendation to reduce the number of High-Risk Third Countries which require Enhanced Due Diligence (EDD). However, EDD requires consideration, among other matters, of the client’s source of wealth.
Currently, there are two lists that trigger EDD, both run by the Financial Action Task Force (FATF): the “Call to Action List”, commonly known as the Black List, and the “Increased Monitoring List”, commonly known as the Grey List.
If the UK MLRs are amended, only the Call to Action (Black List) countries will require EDD. The Increased Monitoring (Grey List) will become a factor to consider in deciding whether or not to apply EDD, but will not automatically require it. At the time of writing, the current Black List countries are Iran, North Korea and Myanmar. There are currently 23 countries on the Grey List. Both lists are subject to review and amendment three times a year.
Other key changes of note
The government’s proposal to amend the MLRs to issue guidance on what constitutes an “unusually complex transaction”, and that these will require Enhanced Due Diligence.
Current language indicates that all “complex transactions” require EDD; however, this phrase seems to have caused firms in other regulated sectors to apply EDD when it may not have been appropriate. Regardless of the change, AMPs should consistently continue to apply a risk-based approach.
Another development is the government’s endorsement of digital ID verification. A new framework, supported by formal guidance, will set out the standards and assurance levels expected of digital ID tools used to meet AML requirements.
HM Treasury is asking that its supervisors and industry bodies review aspects of their guidance relating to Business Relationship Customers (BRCs). BRCs are those with an expectation of repeat business, often thought of as “retainer clients”. The response includes recommendations that sector supervisors consider:
- Whether additional detail or case studies would help firms to apply the regulations regarding BRCs in a consistent and proportionate way; and
- Explaining the trigger for conducting CDD when establishing a business relationship.
Key takeaways
Proposed changes to the UK ML Regulations
- Currency thresholds: Existing euro-denominated thresholds will likely be converted to GBP, simplifying interpretation for UK-based businesses.
- EDD focus: Definition of High-Risk Third Countries requiring EDD will be limited to the FATF “black list” countries. Grey list countries should be considered on a risk-based approach, but will no longer automatically require EDD.
- “Complex transactions” may no longer trigger EDD. The phrase may be changed to “unusually complex transactions”.
Areas for the government to consider additional guidance for the art market
- Digital ID verification: HM Treasury and the Department for Science, Innovation and Technology will jointly produce guidance on using digital identities for identity verification checks.
- Business Relationship Clients: HM Treasury is requesting that its supervisors and industry bodies review the guidance:
- in relation to the establishment of a business relationship, and
- to consider whether additional information would help firms to apply the regulations in a consistent and proportionate way; and
- around the trigger for conducting CDD when establishing a business relationship.
- in relation to the establishment of a business relationship, and
The two most relevant changes in the response are those that ease the burden of compliance on AMPs
- converting from a euro to a GBP threshold, and
- reducing the number of High-Risk Third Countries that will automatically trigger Enhanced Due Diligence.
In spite of these positive steps, AMPs must remain vigilant to the changing UK art market regulatory landscape.
So far this year, the art market has been added to the sectors subject to mandatory reporting of sanctions breaches to the Office of Financial Sanctions Implementation, and the UK witnessed its first conviction of an AMP for breaches of the Terrorist Financing laws.
With the anticipated amendments to the UK ML Regulations and further possible government guidance for the art market, it is important for AMPs to keep abreast of each of these changes and to consider them when evaluating the ongoing risks to your business.
