The consequences of the 5th EU Anti-Money Laundering Directive for the art trade
Business Law Articles
Russell Advocaten B.V.
Amsterdam, Netherlands
On 10 January 2020, the Fifth EU Anti-Money Laundering Directive came into force. This will have major consequences for the art world. What are the most important ones?
Under the Money Laundering and Terrorist Financing (Prevention) Act (Wwft), dealers are obliged to carry out extensive client screening in the event of cash payments of € 10,000 and more. As a result of the Fifth EU Anti-Money Laundering Directive, that came into force on 10 January 2020, this obligation will be further extended. What are the new regulations?
All payments of € 10,000 and more
It has now become mandatory for art dealers to conduct client screening not only for cash payments but also for cashless payments in excess of € 10,000. Related transactions are also included in the € 10,000 limit. Thus, when a person is making partial payments of 6 x € 2,000, these payments will be subject to the screening obligation. This also applies if someone buys three paintings for € 15,000, each worth less than € 10,000, and this is split into three separate agreements and three separate payments. Incidentally, the Cabinet intends to ban cash payments in excess of € 3,000 as of 1 January 2021.
Intermediaries, galleries and auction houses
Intermediaries in art transactions now also have to carry out client screenings in the event of transactions in excess of € 10,000. Here, the Directive explicitly mentions galleries and auction houses.
Art trade through freeports
From now on, client screening is also mandatory for art transactions of € 10,000 and more through freeports. This obligation does not only apply to the trade and agency of art, but also to its storage.
High-risk third countries
In addition, there is a stricter screening obligation if a transaction involves (legal) persons or financial institutions from a country with a high risk of money laundering and terrorist financing. This includes not only countries such as North-Korea, Yemen and Syria but also states such as Ghana, Panama, Puerto Rico and Saudi Arabia. The complete list can be found here.
UBO-register
The intention was to introduce the UBO-register in the Netherlands on 10 January 2020. As from its introduction, companies are obliged to register their ultimate beneficial owner (UBO) with the Chamber of Commerce. However, this deadline was not met. A new start date is not yet known, but it will probably be known shortly. The delay of this UBO-register will not make the mandatory client screening easier.
More information
Do you want to learn more about the mandatory client screening and the UBO-register or do you have any other questions concerning the obligations you have to comply with (international) art transactions? Do you need legal assistance in a dispute involving art? Please contact Paul W.L. Russell, LL.M. (paul.russell@russell.nl or 020-301 55 55).