06.03.2020 The impact of the Fifth Directive on Money Laundering on art market

06.03.2020 The impact of the Fifth Directive on Money Laundering on art market

On Friday 10th January 2020, the European Union’s Fifth Directive on Money Laundering came into effect requiring all art market participants in Europe to be regulated, including art galleries. The United Kingdom has adopted the same legislation and the legal requirements and timeframe are not affected by Brexit.

The EU and UK regulations require us to conduct customer due diligence on both existing and new clients for any artwork sale from the London or Paris galleries above €10,000 (euro), or currency equivalent. Similar “Know Your Customer” (KYC) procedures are practised in the banking, real estate and auction house industries.

  • For individual clients, it is required to see an original or receive a certified copy of photographic ID, such as a passport, in addition to recent proof of a permanent residential address.
  • For companies, it is required to see an original or receive certified documentation of company incorporation, directors, and the ultimate beneficial owner(s), for which personal identity documentation and proof of residential address is equally required.
  • Payment must only be received from, or sent to, the bank account of the person or legal entity named on the invoice. If purchasing an artwork as an agent/advisor acting on behalf of another person or entity, it is required to identify both the third party and the ultimate beneficial owner using the same types of documentation before completing the sale.

The seller will verify this customer information based upon standard “Know Your Customer” (KYC) procedures.

This new process will initially involve additional administration for the clients. Once the KYC process has been successfully completed, you the clients not be required to submit any additional information for future transactions unless specific circumstances require this, such as change of address, identity documents, or other relevant issues.

If you have any questions, please contact us on +44 207 129 129 6