Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

UK Art Dealers Are Exploiting a Loophole to Avoid New Money-Laundering Rules

UK Art Dealers Are Exploiting a Loophole to Avoid New Money-Laundering Rules

The UK’s art market has been subject to stringent new regulations since an anti-money laundering directive came into force in January 2020.
While the new requirements to conduct identity checks and other due diligence on art buyers initially came as a shock to an industry that has for centuries operated on handshakes, much of the market is now accustomed to these processes.

But experts say that some art businesses may have misunderstood a key part of the regulations, and could be unwittingly breaking them.

In some transactions, such as an art sale conducted through a chain of different parties, the rules allow for a business to rely on customer due diligence checks carried out by someone else.

Susan J. Mumford and Chris King, who co-founded ArtAML, a tool designed to facilitate customer due diligence checks, have found that some are leaning on this “reliance” option as a way to avoid disclosing the identity of their clients to other businesses they transact with. But they warn that this is actually a dangerous misinterpretation of the rules, and businesses doing this could face fines or even jail time.

“One of the art market’s greatest concerns about the imposition of anti-money laundering regulations is the potential loss of confidentiality surrounding clients,” Mumford says. “The obligation to reveal the identity of the buyer to another dealer as part of compliance in a transaction may risk having your client poached.”

Some dealers may be tempted to see reliance as a solution to this problem. “They tell you, ‘I have checked my client and they’re okay;’ they don’t reveal the collector’s name, and the deal proceeds,” Mumford says. “The problem is: that’s not how reliance works.”

According to both the official legislation and the guidelines published by the British Art Market Federation, if you are relying on the checks carried out by someone else, you still need to know the identity of the ultimate beneficial owner, as well as what level of customer due diligence has been carried out. This is in addition to coming to an agreement with the third party ensuring that they will make copies of this data available on request if needed for compliance purposes.

Plus, the reliance option cannot be used with just anyone. Businesses can only “rely” on other UK entities that are subject to the same money laundering regulations they are. (They can check whether they are listed as an “Art Market Participant” on the government website after the final deadline for registration has passed on June 10.)

If conducting transactions outside the UK, businesses can only use reliance if the other business is subject to the requirements of a previous money laundering directive that’s in force across Europe—meaning UK art businesses can’t use reliance when collaborating with dealers in the US. (Anti-money laundering regulations could soon be coming to the US, however, following the government’s move to create stricter oversight of antiquities dealers earlier this year.)

If a business wants to avoid breaking the rules, it is in their best interest to carry out the checks themselves, or at the very least verify that the checks have been carried out by the other party. “Arguably, it increases your risk,” Mumford says of the reliance option. “Regardless of who carries out the checks, you are ultimately responsible for them and cannot opt out of responsibility.”
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
House Republicans Move to Defund OECD Over Global Tax Dispute
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
Intel Reports Revenue Beats but Sees 81% Rise in Losses
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
×