On 19 November, an article from Forsters LLP on the International Law Office website reminds one that the EU Fifth AML Directive was enacted into UK law with effect from 10 January and requires art businesses to implement systems intended to prevent their potential use in money laundering or for various other offences (in addition to those systems already required under the Proceeds of Crime Act 2002). The rules apply to those trading, storing or acting as intermediaries in ‘works of art’, where the value involved is more than €10,000 (either for a single work of art or as part of a series of transactions). Those affected are expected to register with HMRC. It says that those businesses affected should have implemented systems and checks to address the new rules. This is potentially difficult for an industry that has emphasised discretion and whose clients may be unused to the level of due diligence information required. The deadline for registration was originally 10 January 2021, but it has now been proposed that this be extended to 10 June 2021 (although the other requirements are already in force). The article says that it is hoped that more detailed guidance will be forthcoming and (assuming registration is extended as proposed) that HMRC will take a more sympathetic approach to non-compliance during the period following 10 June 2021. In the long term, it will be interesting to see how the art market reacts and whether this legislation will cause a cultural shift in an industry which is notorious for its lack of transparency and regulation.
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