Anti-money laundering rules, applying the Fifth Money Laundering Directive, took effect on January 10, 2020.
A number of firms have already had visits and more are planned.
The anti-money laundering rules, applying the Fifth Money Laundering Directive, took effect on January 10, 2020. Art Market Participants (AMP) who sell ‘works of art’ for €10,000 or more must register as an AMP with HMRC and follow a series of guidelines including putting policies in place, conducting risk assessments and keeping written records.
Currently HMRC supervises more than 1100 AMPs and will conduct routine inspections.
Salisbury auction house Woolley & Wallis is one of the businesses that has completed an inspection successfully.
Natalie Milsted of Woolley & Wallis.
Managing director Natalie Milsted said: “Considering the fact that we have had to embrace these regulations and do all this work that is required to comply, then it is actually good to know that our hard work is being checked. Now we can be satisfied that we are doing the right thing.
“My background is in accounting so I understand what HMRC is trying to achieve. The balance for auction houses and dealers is trying to make the complying as simply as possible without compliance taking over your day-to-day work.”
Milstead said her experience of VAT inspections from HMRC was good practice for this type of inspection.
Risk assessment
An HMRC spokesperson said the inspections will involve asking about the “business model, the anti-money laundering risk assessment, policies, controls and procedures in place to make sure these are working effectively to identify and reduce the money laundering risks your business might face”.
Visits can take a whole day.
In the tax year 2022-23, HMRC said it carried out 907 face-to-face inspections across all supervised sectors (not just the art market) and said it issued penalties to 47 AMPs, totalling £265,500.
Many of the AMPs that have been fined were penalised for not registering as an AMP in time for the HMRC deadline which was June 10, 2021.
A list of those that have been fined can be found at atg.news/AMLfines
An HMRC officer may ask the following on a visit: to examine records of transactions; check customer due diligence procedures; see how effective systems are for identifying and reporting suspicious activity to the National Crime Agency (NCA); check that staff know about anti-money laundering legislation and that they are trained to recognise and deal with suspicious activity.
