Taking money laundering to ‘art

“I don’t know much about art, but I know what I like.”  That (very common) attitude might be OK when you’re standing in a gallery trying to make sense of something you’ve seen, but it won’t pass muster if you’re trying to comply with the amended money laundering Regs here in the UK – or indeed with any MLD5-derived legislation.  (And you must: they came into force on 10 January 2020.)  Now you do need to know a bit about art, because the AML family (by which I mean, the group of businesses required to comply with the AML obligations) has been extended to include “art market participants”.  These are defined in the amended Regs as “a firm or sole practitioner who (i) by way of business trades in, or acts as an intermediary in the sale or purchase of, works of art and the value of the transaction, or a series of linked transactions, amounts to 10,000 euros or more; or (ii) is the operator of a freeport when it, or any other firm or sole practitioner, by way of business stores works of art in the freeport and the value of the works of art so stored for a person, or a series of linked persons, amounts to 10,000 euros or more”.  So far so good, but think back to that first sentence and your bafflement in the gallery: just what is a “work of art”?  The Regs are not much for philosophical debate, and make it unromantically clear that “‘work of art’ means anything which, in accordance with section 21(6) to (6B) of the Value Added Tax Act 1994 (value of imported goods), is a work of art for the purposes of section 21(5)(a) of that Act”.

I can barely contain my excitement as I turn to the VAT Act 1994, which tells us that a work of art can be (in short):

  • a painting, drawing, collage, decorative plaque or similar picture
  • an original engraving, lithograph or other print
  • an original sculpture or statuary
  • a sculpture cast
  • a tapestry or other hanging
  • a ceramic
  • an enamel on copper, or
  • a photograph

but not

  • a technical drawing, map or plan
  • “any picture comprised in a manufactured article that has been hand-decorated”, or
  • scenery (including backcloths).

And the picture (hah!) is further enhanced (hah again!) by the addition to the Regs’ list of high-risk transactions of “transactions related to oil, arms, precious metals, tobacco products, cultural artefacts, ivory or other items related to protected species, or other items of archaeological, historical, cultural or religious significance or of rare scientific value”.  If you hoped to escape the grubby world of money laundering by immersing yourself in beauty and culture, think again – we’re all one big happy family now.

This entry was posted in AML, Legislation, Money laundering and tagged , , , , , , , , , , , , , , . Bookmark the permalink.

2 Responses to Taking money laundering to ‘art

  1. Gareth Marklew says:

    I’m particularly pleased to see the inclusion of cultural, archaeological and historical artefacts making an appearance on the list of high-risk transactions: the illicit market in such items has been a problem for years, particularly in areas of political instability, so it’s right that movements of funds linked to that market come under increasing scrutiny.

    • I couldn’t agree more, Gareth – I think it’s an essential expansion of the definition and a vital safeguard. Fingers crossed the UK doesn’t downgrade (and degrade) its AML/CFT position once it has left the EU and can part company with MLD5, MLD6 and so on.

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