How New Anti-Money Laundering Laws Will Affect Art Collectors
“While it is good practice for buyers to do their due diligence on the work of art and its seller before buying, in their capacity as customers, buyers are not required to carry out checks anti-money laundering on their vendors,” Jasani said. “When an AMP buyer buys to resell, the buyer must perform anti-money laundering checks on the end buyer.” So, if a Paris-based dealer buys a €50,000 painting at auction on behalf of an Italian collector, they will need to do an AML due diligence on the collector before finalizing the sale.
Additional steps required of the non-AMP collector include providing personal identification documents and proof of address, and identifying the beneficial owners of companies, trusts, special purpose vehicles and organizations at the AMP if they buy through such a structure. While complying, collectors should always be careful not to transfer this information electronically without encryption – compliance need not become an exposure to fraud or identity theft. Additionally, the EU General Data Protection Regulation (GDPR) of 2018 ensures a minimum level of privacy protection for AMPs involved in Europe and the UK.
Along with this, AMP is required to perform a minimum level of due diligence research on collectors who buy from them to ensure that they do not raise any red flags. Therefore, collectors should expect to receive more questions from their dealers, advisors and auction house contacts.
According to Tamara Bell, specialist in art and luxury assets law at Charles Russell Speechlys, red flags include: “hot the jurisdictions involved in the transaction (for example, funds from Syria or Zimbabwe); the buyer being a “politically exposed person” (for example, a politician or a member of the board of directors of a public oil company), and therefore more likely to be involved in corruption; or the buyer (or seller) who has already been involved in AML investigations.
