The UK art dealer's AML and sanctions duties, and the evidence a collector is asked for

Who is an art market participant

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 apply to "relevant persons" acting in the course of business carried on in the United Kingdom, and since 10 January 2020 the list includes art market participants (regulation 8(1) and (2)(i)). An art market participant is a firm or sole practitioner who by way of business trades in, or acts as an intermediary in the sale or purchase of, works of art where the value of the transaction, or a series of linked transactions, amounts to GBP 10,000 or more, or who operates a freeport in which works of art of that value are stored for a person or a series of linked persons (regulation 14(1)(d)). The figure was 10,000 euros until 30 June 2026, when the Money Laundering and Terrorist Financing (Amendment) Regulations 2026 substituted sterling throughout the 2017 Regulations, with a rule that a sterling amount includes its equivalent in any currency (regulation 3(2) of the 2017 Regulations); many published summaries, and HMRC's own guidance page for the sector (last updated 6 August 2024), still show the euro figure. "Work of art" is defined by reference to section 21(6) to (6B) of the Value Added Tax Act 1994: hand-executed paintings, drawings and collages, original prints, original sculpture, limited-edition casts, hand-made tapestries, signed ceramics and enamels, and photographs printed by or under the supervision of the photographer, signed and in editions of no more than thirty. An artist, or a member of a firm, selling their own work is not an art market participant for that sale (regulation 14(3)).

Galleries, dealers and auction houses are the obvious cases. The intermediary limb reaches advisers and agents who act in the sale or purchase on another's behalf; HMRC's guidance states that a person who negotiates the price with another art market participant or acts on behalf of a customer during a sale or purchase is expected to register, while giving art advice, charging for provenance research without involvement in the sale, introducing clients, framing or shipping is not. Art market participants had to apply for registration with HMRC before 10 June 2021 and may not carry on the business on or after that date without being registered or having an application pending (regulation 56(6)); contravening a relevant requirement is a criminal offence carrying up to two years on indictment, with a defence of all reasonable steps and all due diligence, and the court must consider whether the person followed guidance approved by the Treasury (regulation 86).

When the duties are triggered

Customer due diligence is required when the participant establishes a business relationship, meaning a relationship expected at the outset to have an element of duration (regulation 4(1)), and, for art market participants, when it carries out or acts in respect of an occasional transaction in a work of art, whether executed in a single operation or in several operations which appear to be linked, whose value amounts to GBP 10,000 or more, or stores works of art of that value as a freeport operator (regulation 27(7C)). The general occasional-transaction trigger for other relevant persons, now GBP 12,000, does not apply to art market participants (regulation 27(2)). A run of invoices under the figure that together reach it is caught by the linked-operations words; a dealer who splits a sale to stay below the threshold has not escaped the regulation and has given itself a reason to consider a disclosure.

What the dealer must establish

The measures are set out in regulation 28. The participant must identify the customer and verify the identity on the basis of documents or information from a reliable source independent of both of them. Where the customer is a body corporate it must obtain and verify the name, registration number and registered address, and take reasonable measures to understand the ownership and control structure of the legal person (regulation 28(3) and (3A)). It must identify any beneficial owner and take reasonable measures to verify that identity; for an unlisted company the beneficial owner is an individual who ultimately owns or controls more than 25 per cent of the shares or voting rights, who exercises ultimate control over the management, or who otherwise controls the company (regulation 5(1)). Where someone purports to act on behalf of the customer, that person's identity and authority must be verified as well (regulation 28(10)). The extent of the measures is risk-based and may differ from case to case (regulation 28(12)). Verification is to be completed before the business relationship is established or the transaction carried out; for a business relationship only, it may be completed during its establishment where that is necessary not to interrupt the normal conduct of business and there is little risk (regulation 30(2) and (3)), and there is no such latitude for an occasional transaction. A participant may rely on another relevant person, for example the buyer's bank or law firm, to have applied the measures, but it remains liable for any failure to apply them and must obtain the information immediately (regulation 39). Records are kept for five years from the completion of the occasional transaction or the end of the relationship (regulation 40).

That list explains the questions. A buyer who signs the contract personally is asked for identification. A buyer who uses a company is asked for its constitutional documents, an ownership chart and the identity of every individual who owns or controls more than 25 per cent of its shares or voting rights or who otherwise controls it (regulation 5); a buyer who uses a trust is asked for the settlor, the trustees, the beneficiaries or the class, and anyone with control over the trust (regulation 6), with no percentage threshold; in each case because the regulation requires the participant to understand the structure, not merely to record the vehicle's name. An adviser who negotiates on the buyer's behalf is asked for evidence of authority. It is the content of the participant's file, and the file is what HMRC inspects.

When the questions go further

Enhanced due diligence is mandatory in the cases listed in regulation 33(1): where the participant's own risk assessment identifies a high risk; in any transaction or business relationship with a person established in a FATF call for action country, the term that replaced "high-risk third country" on 30 June 2026; where the customer or a beneficial owner is a politically exposed person, a family member of one or a known close associate of one; where the customer has provided false or stolen identification; and where a transaction is unusually complex or unusually large given its nature, follows an unusual pattern or has no apparent economic or legal purpose (regulation 33(1)(f)). For a person established in a FATF call for action country the measures are prescribed (regulation 33(3A)): additional information on the customer, its beneficial owner and the intended relationship, the source of funds and source of wealth, the reasons for the transactions, senior management approval and enhanced monitoring. Where the transaction is unusually large or complex or has no apparent purpose, the enhanced measures must include examining, as far as reasonably possible, its background and purpose and increased monitoring (regulation 33(4)); in other cases they may include additional independent verification and measures to understand better the background, ownership and financial situation of the customer (regulation 33(5)). For a politically exposed person the participant must obtain senior management approval, take adequate measures to establish the source of wealth and the source of funds, and conduct enhanced ongoing monitoring (regulation 35(5)); since 10 January 2024 a domestic PEP starts from a lower risk assumption (regulation 35(3A)).

Regulation 33(6) then lists the risk factors the participant must take into account in deciding whether enhanced measures are needed in other cases. Among them: a customer that is a legal person or arrangement that is a vehicle for holding personal assets; a corporate structure that is unusual or excessively complex given the nature of the company's business; a product or transaction that might favour anonymity; non-face-to-face relationships without safeguards; payments received from unknown or unassociated third parties; transactions related to cultural artefacts or other items of archaeological, historical, cultural or religious significance; and countries subject to sanctions or embargoes. These are factors to be weighed, not findings. A family-office holding company, a request for confidentiality in the invoice or an invoice settled by a relative are each a reason for the participant to ask a further question and to record the answer. None of them is, of itself, a finding of high risk (regulation 33(7)), and none is a prohibition; whether a factor grounds suspicion, or leads the participant to decline, depends on the explanation given and on the rest of the file. OFSI's sector guidance lists a preference for anonymity and confidentiality, intermediaries and shell companies, lack of clarity on the source of the payment and changes in payment arrangements as red flags; that is guidance on what the participant looks at.

If the collector declines

A collector who buys personally owes the participant nothing under the Regulations. A UK company that buys must provide its ownership and beneficial-ownership information on request (regulation 43), and the trustees of a relevant trust must say that they act as trustees and, on request, identify the beneficial owners (regulation 44); a non-UK company and a trust outside Part 5 of the Regulations carry no such duty, and the participant's own obligation to obtain the information is unchanged. The consequence of an incomplete answer falls on the participant: where it is unable to apply customer due diligence measures it must not carry out the transaction or establish the business relationship, must terminate any existing relationship, and must consider whether it is required to make a disclosure under Part 7 of the Proceeds of Crime Act 2002 (regulation 31). The art trade at the same threshold is in the regulated sector for the purposes of that Part (Schedule 9, paragraph 1(1)(u)), so a participant who knows or suspects, or has reasonable grounds for knowing or suspecting, that another person is engaged in money laundering, and who does not disclose as soon as practicable, commits an offence (section 330). A participant who wants to complete a sale it suspects makes an authorised disclosure and waits: consent is deemed given if no refusal comes within seven working days (in practice from the National Crime Agency), and if it refuses the participant must wait out a 31-day moratorium, which a court may extend (sections 335 and 338). Telling the customer that a disclosure has been made, where that is likely to prejudice an investigation, is the separate offence of tipping off (section 333A). A collector who meets an unexplained delay in a London sale may be looking at this mechanism from the outside, and the dealer will usually be unable to say so.

Sanctions: a parallel regime

Sanctions are not anti-money-laundering law and are not confined to the regulated sector. Under the Russia (Sanctions) (EU Exit) Regulations 2019, taken here as the worked example, a person must not deal with funds or economic resources owned, held or controlled by a designated person, and must not make funds or economic resources available, directly or indirectly, to a designated person, where the person knows or has reasonable cause to suspect that this is what they are doing (regulations 11, 12 and 14); an entity is owned or controlled by a designated person where the person holds, directly or indirectly, more than 50 per cent of its shares or voting rights, can appoint or remove a majority of the board, or can reasonably be expected to achieve that its affairs are conducted in accordance with the person's wishes (regulation 7). Those prohibitions bind the collector, the dealer and the shipper alike for conduct in the United Kingdom, and UK persons wherever they act (regulation 3). Since the OFSI consolidated list closed on 28 January 2026, the Foreign, Commonwealth and Development Office states that the UK Sanctions List it publishes is the only source of UK designations.

Two features are specific to the art market. Since 14 May 2025 an art market participant registered, or required to register, with HMRC is a "relevant firm" that must inform the Treasury as soon as practicable if it knows or has reasonable cause to suspect that a person is a designated person or has breached a financial-sanctions prohibition under Part 3 of the Regulations, where the information came to it in the course of carrying on its business, which for a dealer or intermediary means a transaction or linked transactions at GBP 10,000 or more (regulations 70 and 71(1)(k), (3E) and (5)(da), inserted by SI 2024/1157 and converted to sterling on 13 May 2026 by SI 2026/443). And the trade-sanctions chapter prohibits the export of luxury goods to or for use in Russia and making them available to a person connected with Russia; Schedule 3A lists "works of art, collectors' pieces and antiques, meaning any thing which falls within chapter 97", without the sales-price floor that most other entries in the Schedule carry (regulation 46B and Schedule 3A, paragraph 21). A dealer's contract therefore asks about the work's destination and the buyer's connections as well as the buyer's identity, and a sanctions clause is, in our judgement, now to be expected in the dealer's terms.

A US collector buying through a London dealer

For a US collector the London dealer's questions are UK law and the dealer's duties stay the dealer's. What the collector brings is a second regime. The US sanctions programmes bind "United States persons", defined for the Russia programme as any United States citizen, lawful permanent resident, entity organised under US law or person in the United States (31 CFR 587.314), wherever the transaction takes place; a US citizen buying in London is within OFAC's reach on the day of the sale. OFAC's advisory of 30 October 2020 on high-value artwork states that the informational-materials exemption in the US sanctions statutes does not categorically exempt dealings in artwork, that OFAC does not read it to allow blocked persons or their facilitators to evade sanctions, and that US persons are generally prohibited from transactions with persons on the SDN List; it names galleries, museums, private collectors, auction companies, agents and brokers, and it encourages a risk-based compliance programme. That is guidance; the prohibitions it describes are in the regulations, and the advisory shows how OFAC reads them. The UK Sanctions List and the SDN List are separate registers maintained by separate authorities under separate statutes; a name on one is not necessarily on the other, and the US collector checks both.

US federal anti-money-laundering law does not, at the date of this update, treat dealers in works of art as financial institutions under the Bank Secrecy Act. The Anti-Money Laundering Act of 2020 added persons engaged in the trade of antiquities, effective only on the effective date of final rules which have not been issued; FinCEN published an advance notice of proposed rulemaking on antiquities on 24 September 2021, and the Treasury's study of February 2022 found some evidence of money-laundering risk in the high-value art market and set out regulatory and non-regulatory options. The London dealer's questions to a US collector rest on a UK statute; a New York dealer has no equivalent customer-diligence statute behind its own, although it must report cash of more than USD 10,000 received in one or related transactions on Form 8300 (26 USC 6050I and 31 USC 5331; the IRS instructions treat works of art as collectibles for that purpose), and the federal money-laundering offences apply to it as to anyone.

Across the border

In the European Union, Directive (EU) 2015/849 as amended by Directive (EU) 2018/843 lists among obliged entities persons trading or acting as intermediaries in the trade of works of art, including galleries and auction houses, and persons storing, trading or intermediating in works of art through free ports, in each case where the value of the transaction or a series of linked transactions amounts to EUR 10,000 or more (Article 2(1)(3)(i) and (j)); member states may set stricter thresholds and fix the due diligence detail and the supervisor in their implementing law, and the single rulebook of Regulation (EU) 2024/1624 applies from 10 July 2027. In Switzerland the Anti-Money Laundering Act reaches dealers in goods only where they accept cash: a dealer who takes more than CHF 100,000 in cash in a trade transaction must identify the contracting party, establish the beneficial owner, document the transaction and clarify its background where it appears unusual or where there are indications of criminal origin, with the duty also applying where the cash is paid in tranches that together exceed the figure (Article 8a); amendments to that article take effect on 1 October 2026. None of the three regimes has the same threshold, the same trigger or the same scope, and a collector buying in London, Paris and Geneva in the same season will be asked different questions in each.

What this means for you

• The duty is the dealer's; the evidence is the collector's. The Regulations oblige the art market participant, not the buyer, and the collector's documents are the content of the participant's file. A refusal has one legal consequence for the dealer: no transaction, and a decision whether to disclose (regulation 31).
• The threshold is GBP 10,000 in sterling, measured over linked operations. Since 30 June 2026 regulation 14 and the art-market trigger in regulation 27(7C) read in sterling, with equivalents in any currency; the general GBP 12,000 trigger does not apply to art market participants. Summaries that still say 10,000 euros are out of date.
• A purchasing vehicle means an ownership chart. Regulation 28(3A) requires the participant to understand the ownership and control structure; regulation 5 sets the line for a company at more than 25 per cent or control, and regulation 6 names the trust categories without a threshold; a PEP, a family member or a known close associate means source of wealth and source of funds (regulation 35). A holding vehicle, a third-party payer or a transaction favouring anonymity is a listed risk factor to weigh (regulation 33(6)), not a prohibition and not, by itself, a finding.
• An unexplained delay may be a disclosure. In the regulated sector the participant must disclose knowledge or suspicion (POCA section 330); consent is deemed after seven working days and a refusal brings a 31-day moratorium (sections 335 and 338); telling the customer risks the tipping-off offence (section 333A).
• Sanctions run alongside, and bind the collector directly. The asset-freeze prohibitions and the 50 per cent ownership-and-control test bind any person for conduct in the United Kingdom and UK persons anywhere (regulation 3), so they reach the collector in a London sale directly; since 14 May 2025 registered art market participants must report to OFSI; works of art in chapter 97 are luxury goods for the Russia export ban with no price floor; the UK Sanctions List is the only UK list since 28 January 2026.
• A US collector carries OFAC into every purchase. US persons are bound wherever they buy (31 CFR 587.314); OFAC's 2020 art advisory is the enforcement guidance; US federal AML law does not yet make art dealers financial institutions under the Bank Secrecy Act, though cash reporting on Form 8300 and the criminal statutes apply regardless; the UK and US lists are separate and both are checked.

Isak Legal advises galleries, dealers, intermediaries and lenders on their AML and sanctions frameworks under the UK, EU and Swiss regimes, and collectors and family offices on the evidence a dealer, auction house or bank is required to request and on the US sanctions position of a US buyer, working with a registered Swiss lawyer where Swiss law requires one. See our Art Law, Sanctions and AML and United Kingdom pages, or get in touch.

This client update is provided for general information only, reflects the position as at 24 September 2026 and does not constitute legal advice or create a lawyer-client relationship. The statutory position is taken from the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 as amended by SI 2026/621, the Proceeds of Crime Act 2002, the Value Added Tax Act 1994 and the Russia (Sanctions) (EU Exit) Regulations 2019 as amended by SI 2024/1157 and SI 2026/443, all as published on legislation.gov.uk; from 31 CFR Part 587 and 31 U.S.C. 5312 as published by the US Government; from Directive (EU) 2018/843 on EUR-Lex; and from the Swiss Anti-Money Laundering Act (SR 955.0) on Fedlex (German text). HMRC's and OFSI's pages, OFAC's advisory and the Treasury study are guidance and rank below the instruments. Verify the current texts at the official sources linked above before acting. For advice on a specific matter, please contact us.