https://www.artnews.com/art-news/news/uk-art-businesses-fined-money-laundering-compliance-aml-1234736548/

Nearly 50 UK art businesses have landed on a newly published list of Art Market Participants (AMPs) that failed to comply with money laundering regulations, according to a disclosure by HM Revenue & Customs (HMRC) last week. The fines were first reported by the Art Newspaper.

Galleries such as Opera and Carl Kostyál made the HMRC list, as did a fundraising initiative led by White Cube. The penalties, issued between January 1 and September 30, 2024, average over £3,000 and peak at £13,000. All stemmed from failure to register by the June 2021 deadline.

According to the Art Newspaper, some businesses voluntarily disclosed their late registration, only to find that they still faced substantial fines.

One gallerist, speaking anonymously to the Art Newspaper, said their £10,000 penalty had “scared so many dealers we know” and left them feeling like they’d been penalized “for being honest.” Moreover, several anonymous sources told the Art Newspaper that they had opted not to appeal their fines, citing difficulties in identifying the right contact at HMRC and a wish to “move on and forget the experience.”

A handful of experts were brave enough, however, to challenge the HMRC’s methods in print. Rakhi Talwar, an art compliance consultant, told the Art Newspaper that while “late registration fines are based on a set formula,” the penalty calculations are flawed. “It’s not proportionate to include profits from transactions that fall below the €10,000 threshold or from services unrelated to art dealing.”

Susan Mumford, founder of compliance platform ArtAML, agreed, particularly when it comes to smaller galleries. “For micro-businesses rarely transacting above the threshold, we always recommend working with HMRC to arrange manageable payments. The aim isn’t to force [art market participants] out of business.” She noted that voluntary registration can halve fines, while payments made within 30 days can reduce them by an additional 25 percent.

An HMRC spokesperson defended the agency’s approach, saying that its purpose is to “support businesses in protecting themselves from criminals who would exploit their services,” which includes taking action against those businesses who fail to meet their legal obligations.

The UK’s anti-money laundering regulations have a wide reach. Both art advisers and interior design firms made it on to the HMRC’s list. This has led to some criticism that the agency, which was focused on raising awareness among galleries and art dealers, didn’t comprehensively handle its due diligence when it came to intermediaries like designers and advisers. Meanwhile, trade associations are calling for reform, including a more realistic threshold and “reassessment of the art market’s high-risk classification.”