New obligations to protect UK’s art market from money laundering
Mary-Alice Stack, 20 May 2021
The value of the UK art market is estimated at c.£10 billion per annum and represents 20% of global art trade. The size of our market share (second only to the USA, alongside China) has been long recognised as a key strength of the UK’s creative economy. But the Government’s latest National Risk Assessment from December 2020 puts it at high risk of money laundering. But what exactly is money laundering, and how does it impact on the art market?
Money laundering is the process by which the financial proceeds of criminal activity are dealt with in a way that makes those funds appear lawful. At its most basic, this can happen when criminals buy art with dirty money then resell it – or use it as collateral for a loan.
Alternatively, art can be the end destination for dirty money: bought by criminals to keep for enjoyment and/or as a status symbol that can raise their social standing and influence others. A third way is by facilitating or handling the sale or purchase of stolen or forged art.
Under the UK’s anti-money laundering regime, it is an offence to acquire, use, possess, conceal, disguise, convert, transfer or remove criminal property from the UK. It is also prohibited to get involved in any arrangement – such as the sale of goods – in which a person knows, or even suspects, that it helps with the acquisition, retention, use or control of criminal property.
Many galleries, artists and dealers could find themselves in a position that might arouse suspicion of money laundering. For example, a client could be an agent for an undisclosed seller or buyer; the artwork you are selling might have no – or limited – provenance documentation; or a client might want to sell at an artificially high or low price.
Since January 2020, Art Market Participants have been under a legal duty to report suspicions of money laundering or terrorist financing, and to adopt a risk-based approach to combat it, and any other offences relating to the proceeds of crime. This puts the onus on art businesses to establish a culture of compliance.
