Anti-Money Laundering for the art and finance market has been saved
Adopting a risk-based approach means making sure that enough time and energy is invested in areas where ML/TF risk is highest. First, you must identify and assess the severity of your business’ potential risk indicators. You can assess this risk by considering various factors, including:
- The type of buyer/seller (e.g., an individual collector, a specialized company, another art professional, an offshore trust, etc.)
- The way art professionals enter into contact with the buyer/seller (e.g., face-to-face, at an art fair, through a web platform or an intermediary, etc.)
- The type of artwork and transactions at stake (e.g., are the goods consistent with the profile of the buyer/seller, is the origin of the artwork well-known and documented, is the initiated transaction a sale, a loan, or a donation, etc.)
- The countries involved (e.g., is the buyer/seller domiciled in a country with equivalent AML and counter terrorist financing [CTF] regulations, is the artwork from a country that is subject to trade sanctions, etc.)
Art professionals must identify and verify their customers’ identities. A few universal rules apply when performing customer due diligence:
- Timeliness: it must be performed as soon as the business relationship starts.
- Risk-based: it must be tailored to the customer’s risk level.
- Up-to-date: it must be regularly performed on an ongoing basis to collect accurate information and documentation on the customer.
When an art professional has a business relationship with a customer, the customer’s information must be kept up-to-date. The customer’s circumstances are likely to change throughout the relationship; therefore, the risk exposure of the customer may change. Such changes may affect the overall customer risk profile and, as a consequence, the checks to be performed.
Effective AML risk management relies on the design and implementation of adequate internal AML processes. An adequate internal organization includes the following key elements:
- Developing internal AML policies, controls and procedures.
- Appointing a person in charge of AML-related matters (compliance officer).
- Training staff to assess AML risks and ensure a good level of awareness.
- Keeping track of the risks identified and the actions taken to mitigate them.
Art professionals who fall within the scope of the AMLD5 must cooperate fully with the authorities by:
- Filing, without delay, suspicious activity/transaction reports if ML/TF is suspected.
- Responding to requests for information from the competent authorities.