Money-laundering rules mean more work for dealers
Brussels wants to lower amount of cash businesses can accept without asking questions
By Riah Pryor. Market, Issue 236, June 2012
Published online: 13 June 2012
Proposed changes to money-laundering legislation could mean that more galleries will need to register as “high-value dealers” and comply with stricter guidelines when accepting cash from buyers.
At the moment, galleries and auction houses must register as high-value dealers if they accept cash transactions of €15,000 or more. In a report published in April on the application of the anti-money-laundering directive, the European Commission recommended lowering the threshold, but did not suggest a sum.
“Lowering the threshold will not make life more difficult for money launderers,” says Pierre Valentin, who specialises in art law at the legal firm Withers. “It will, however, make business more difficult for the art trade. It is the smaller dealers in antiques and lower-end fine art who accept cash: and they’re the ones suffering most in this economic climate.”
The report says that clearer guidelines should be drawn up on procedures for checking buyers and companies. These could include verifying the buyer’s identity—for example, by checking passports and utility bills—but it also suggests that the art trade takes a more proactive approach and asks more questions about the nature of businesses. The trade should have policies to “prevent the business being used for money laundering or terrorist financing”.
These measures, however, are likely to add pressure to smaller businesses. “[The processes] are particularly onerous if you routinely deal with foreign companies, trusts and other entities… most people do not walk around with their passport and an original utility bill,” Valentin says.
The art trade is growing increasingly aware of its obligations under this directive. Even higher-end traders who are unlikely to accept large amounts of cash, like Christie’s, have set up compliance teams. But with sales of art potentially part of the money-laundering process, and given the serious implications (including imprisonment) of failing to comply, there are concerns that the art trade is not fully up to speed.
The European Commission is asking for comments on its suggestions, which also include questions as to whether tax avoidance should be made a specific criminal offence. It plans to bring forward a proposal for a fourth anti-money-laundering directive in the autumn.
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