The UK Government has published a Statutory Instrument document, announcing it intends to delay the deadline for Anti-Money Laundering registration for the art market and others under the new 5AMLD until June 10 next year. This is big news for auction houses and dealers struggling to set up systems and training in the pandemic, who were due to have everything in place by January 10.
Those affected now have until June 10, 2021 to comply
The Government is to push back the deadline for businesses to register under the new Anti-Money Laundering (AML) regulations from January 10 to June 10 next year.
The five-month delay comes in the wake of pandemic restrictions, giving art market and other firms more time to set up compliance structures.
The proposal to change the deadline was tucked away in a draft Statutory Instrument updating details of the new law after emergency measures to deal with the pandemic and lockdown meant diverting attention away from preparations for AMLenforcement.
Susan J Mumford, CEO of ArtAML, a new company providing online AML compliance support for firms and individuals over AML, has been involved in discussions with HMRC about the development of guidance for art market professionals.
She said: “The delay is welcome and appropriate under the circumstances, as preparations need to be thorough and accurately targeted. However, it should not be seen as an opportunity to push compliance down the order of business priorities, as all individuals and firms affected need to address the matter seriously.”
She and her colleagues are helping HMRC develop clear and simple guidance that everyone should be able to follow easily.
“A lot of people have been very worried about their ability to meet their obligations because they fear the compliance measures will be too complicated, time consuming and costly. We are working hard to ensure that this is not the case because if the system is not user friendly, it will not be effective.
“In fact, thanks to the technology that we and others have been developing, obligations that could have otherwise been a real challenge to meet should now prove much more manageable.”
Mumford says that those looking to complete their preparations in the next few months should now prioritise the following:
– Focus on a ‘risk-based approach’. Compliance is not a box-ticking exercise; it’s about developing a way of thinking. Dedicated technology can walk you through the process, saving time and prompting risk-based considerations. Training is important for you and your staff (and you will be asked about this when registering).
– Conduct your business’s AML risk assessment and create a corresponding AML Policy (aka ‘policies, controls and procedures’). This will both help compliance now and prepare you for your AMP (Art Market Participant) registration.
– Start keeping records. This includes documentation showing you have conducted training (as above), as well as any AML checks you have undertaken for qualifying transactions of 10,000+ Euros. Associated records must be kept for a minimum of five years after the completion of transactions. Include notes on why you made decisions on whether or not to transact with entities, particularly where you’re unsure. This could prove to be vital for future investigations.
– Set up secure storage. This will help you meet GDPR requirements and protect sensitive personal information about customers. The new AML law introduces a level of transparency to a transaction, but this is separate fromprivacy or confidentiality considerations.
– Back up records in two ways. Use the cloud and a physical external hard drive, all securely encrypted.
– Review your ability to assess people in AML checks. Your business relies upon you socialising and assessing people. How good are you at this now and what do you need to do to reduce risk further on this point? How easy can you spot ‘red flags’?
– Start educating buyers now. Get those you transact with used to the idea of AML compliance now. As you sell pieces and arrange deals, explain what you need and why you need it.
Mumford also advises businesses to beware of pitfalls: “The Guidance is long and, despite best efforts, doesn’t cover the complexities of the art market. The result is that what is expected of whom is not always clear, prompting confusion and concern. We are grateful to have regular opportunities to talk with HMRC to support their efforts in providing more clarity, but until further guidance has been published, do your best to comply according to the information available to you, and keep records of what has been done and why.”