- September 29, 2025
- Posted by: FCS Compliance
- Category: Art Market, Blog
Complying with the UK Money Laundering Regulations (MLR 2017) continues to be one of the most common challenges for art market participants (AMPs). A key issue is determining when a transaction falls within scope of the regulations, and therefore requires Customer Due Diligence (CDD) on the other party.
HMRC has become increasingly critical of weak or inconsistent compliance in the art market. In June 2025, a fine of more than £100,000 was imposed in part due to failures in applying due diligence correctly. To help reduce the risk of similar penalties, this article highlights two less obvious, but important situations, where AMPs must conduct due diligence: buying in partnership (or “buying in shares”) and exchanging works of art.
Buying in Partnership or Shares
HMRC’s Economic Crime Handbook describes “joint ventures” as potentially triggering CDD obligations. Within the art market, these are often referred to as “buying in shares” or “buying in partnership.”
Where the criteria of the UK Money Laundering Regulations (MLRs) are met, AMPs purchasing a work of art jointly are required to conduct CDD on one another. This type of transaction establishes a business relationship, and such relationships require ongoing monitoring. When the artwork is eventually sold, the due diligence should be refreshed and updated to remain compliant.
Exchange of Art
Exchanges of artwork take many forms:
- A straightforward swap of two pieces of similar value
- A partial exchange combined with a payment
- A more complex arrangement involving multiple works
Regardless of the structure, an exchange may qualify as a transaction under the UK Money Laundering Regulations. Importantly, exchanges can trigger CDD requirements even if they involve collectors who are not acting “by way of business.”
For example, if a collector wishes to return a work in exchange for another, the gallery must carry out CDD on the collector, even if they are not themselves an AMP.
When applying the UK MLRs, the key test is the monetary value of the transaction—specifically, the value of the artwork being transferred. The amount of money changing hands is not the determining factor. For private sales, this means the final invoiced price, inclusive of commission, taxes, and ancillary costs.
HMRC Examples of Exchanges
HMRC provides several scenarios where exchanges clearly fall within AMP activity and require CDD:
- Trading Paintings with Different Values
Two galleries trade paintings, one worth £5,000 and the other £20,000. The gallery receiving the higher-value work pays £15,000 to balance the exchange. Both galleries must conduct CDD. - Trading Paintings with Equal Values
Two galleries exchange works, each valued at £20,000. Despite no money changing hands, this is still considered AMP activity and requires CDD. - Exchanging Art Without Money
If an AMP exchanges a work with another AMP, person, or business—even without a monetary element—it is still classed as a transaction under the MLR 2017. Full compliance obligations apply.
Conclusion
For UK art market participants, compliance with AML regulations requires more than monitoring straightforward sales. Situations such as buying in partnership or exchanging works of art carry equal weight under HMRC’s interpretation of the MLR 2017. Failing to recognise these triggers exposes businesses to penalties, reputational risk, and regulatory scrutiny.
At FCS Compliance, our art division specialises in helping AMPs meet their AML obligations in a cost efficient manner. Whether you need practical training, CDD support, or tailored compliance consultancy, our experts ensure your business remains compliant while protecting its reputation.
Contact FCS Compliance today to discuss how can we support your AML responsibilities in the art market.
