The UK’s Anti Money Laundering Guidance has been updated
The UK’s Anti Money Laundering Guidance has been updated, resulting in clarification for Art Market Participants (AMPs) on who its customers are.
With the update, comes some clarity relating to who falls into the “regulated art sector” and who represents the customer as far as KYC/CDD checks are concerned.
The Money Laundering Regulations 2017 apply to AMPs who are defined as traders or intermediaries in the sale or purchase of works of art valued at €10,000 or more.
However, who exactly was an intermediary was up until now undefined, and the amended Guidelines clarify that an intermediary is “someone who, by way of business, actively transacts in the sale or purchase of works of art on behalf of a seller or buyer under whose authority they act”.
The Guidelines confirm that an intermediary could be an agent or an art dealer including an art gallery, auction house or an online sales platform that is conducting relevant activity by selling to UK customers, even if not physically present in the UK.
From this definition, it becomes clear that the following are not classified as intermediaries:
- Framers,
- Shippers,
- A person just providing contact information, provided they do not “actively participate/transact” in purchase/sale transactions,
- Introducers, unless they receive a financial value which directly relates to their active participation as an intermediary in the sale/purchase of awork of art,
- Artists selling their own work, whether as an individual/sole practitioner or through a business they own,
- Artists’ estates selling the work of a deceased artist,
- A person or entity who rents out art if the rental agreement provides for ownership of the artwork to pass to the renter at the end of a specified period.
Whilst providing some clarity on certain aspects of AMPs, the updated guidance fails to give a definition of what it means by “actively transacts”.
Expansion of UK Government’s Dormant Account Charity Scheme
The UK Government is set to expand a scheme that transfers money to good causes from banks and building societies that has been untouched by account holders, and despite attempts to contact the owner of the funds, has remained unclaimed for 15 years or more.
The average amount in the accounts is reported to be around £100, yet over the last 11 years since the scheme has been running, some £1.6bn has been taken from these so called “dormant accounts”, with £880m of this being passed on to charities.
Under the existing scheme, about 40 banks and building societies transfer money every year to the fund. With the expansion, city firms across the insurance, pensions, investment and wealth management sectors will be able to join the scheme, resulting in up to a further 500 more firms contributing to the fund.
Gambling Commission regulator fines Entain
The Gambling Commission regulator fines Entain, the owner of gambling brands Ladbrokes and Coral, £17million for failing to prevent money laundering and not stopping addicts from falling into further debt.
The Commission found that clients of the two organisations were able to spend hundreds of thousands of pounds in online gambling without appropriate checks being undertaken. The Commission’s Chief Executive said that “completely unacceptable anti-money laundering and safer gambling failures” has occurred by Entain and warned that if the company breaks the rules again it might lose its licence.
As part of the investigation the Commission found that one client was allowed to deposit £742,000 online over 14 months without appropriate checks on the source of their money being made, whilst another, who was known to live in social housing paid in £186,000 over six months.
In another example, an online user was blocked from Coral because they had spent £60,000 in 12 months and had failed to provide source of funds information was immediately able to open an account with Ladbrokes and deposited £30,000 in just one day.
This is an example of how money laundering and vulnerable customer management failures will do not go unaddressed, even outside of the FCA’s remit.
Anti-Financial Crime Support – How can Complyport Help?
Our experienced Financial Crime and Forensics team led by Martin Schofield—one of the world’s leading specialists in the field—brings a wealth of experience to every project we are engaged in. Our highly experienced financial crime professionals and forensic experts, in subjects such as anti-money laundering, counter terrorist financing, anti-bribery and corruption and fraud and regularly help our clients navigate the complexities of the financial crime and money laundering environment. Services offered by Complyport include:
- AML/Fraud policy & training reviews,
- Transaction monitoring / reporting framework reviews,
- Vulnerable Customer Management framework reviews/audits/gap analysis,
- Financial crime health checks and audits,
- Implementation of financial crime, AML, CTF, ABC, Fraud and market abuse controls and frameworks,
- Ongoing advice on financial crime, AML, CTF, market abuse and fraud prevention,
- Authoring/reviewing financial crime policies,
- Outsourced MLRO support
- Outsourced KYC and CDD support,
- Assistance in identifying Politically Exposed Persons (PEPs),
- Assistance in navigating international sanctions,
- Support with preventing market abuse and insider dealing,
- Expert Witness in Financial Crime cases
- Forensics and Investigations
- Design and/or delivery of online or face to face financial crime training
If this article has raised any questions, or you think your firm may require assistance, please contact either Martin Schofield via martin.schofield@complyport.co.uk or Jan Hagen via jan.hagen@complyport.co.uk to book in a free consultation.
About Complyport
Complyport is the City’s market leading consulting firm supporting the UK financial services industry for over 20 years. We specialise in providing Governance, Risk and Compliance services to support the regulated financial services industry to raise standards and thrive.
Complyport advises and assists firms to become authorised and to comply with the rules and requirements of regulators on an ongoing basis. Our vision is to be there for our clients every step of the way, helping them change, grow, and excel through expertise, insight, and innovation, and in so doing to become our clients’ most valued supplier and trusted advisor.
With presence in the UK and EU, as well as via our Associates Network, Complyport can assist firms across multiple jurisdictions.
Complyport’s multidisciplinary consultants possess deep expertise in their field, having acted in FCA skilled person reviews, as expert witnesses in legal cases and as expert investigators for firms or their legal advisers.
Day to day, we conduct audits and reviews of a firm’s products, processes, policies, and procedures to identify scope for business, to determine the impact of regulatory developments and to verify compliance with local regulations. Complyport can also assist firms by providing personnel to cover all the key compliance functions including resourcing individuals to be registered as your Compliance Oversight Function (SMF16) and/or Money-Laundering Reporting Officer (SMF17).
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