In late January 2024, the UK Joint Money Laundering Intelligence Taskforce, with the support and cooperation of private industry and UK regulatory and enforcement bodies including HM Treasury’s Office of Financial Sanctions Implementation (OFSI), HM Revenue & Customs (HMRC), and the UK National Crime Agency (NCA), published an Amber Alert in order to highlight the need for those who operate in the artwork storage facilities sector to be wary of attempts at sanctions evasions.
The Alert is directed at specialist services that operate within the artwork storage facilities sector; it defines these facilities as “any facility or space that is used to hold, store or move artworks, antiques, antiquities and collectibles…include[ing] purpose-built warehouses, auction houses, art dealerships, galleries, museums and freeports.”
According to the Alert, criminals are managing to make use of the art market to conduct illegal activities, and participants in the art market often proceed on the assumption that someone else has done the due diligence to identify suspicious activity relating to sanctions evasion, cultural property trafficking, money laundering or other crimes. Operators in the sector should pay careful attention to regular payments made from ambiguous sources, changes in client circumstances, attempts to transfer ownership of artwork or cultural property to a family member or business associate, use of shell companies or structures where the ultimate beneficial owner is unclear, attempts to sell artwork quickly or move it to another jurisdiction, and requests to store objects that are subject to restrictions – or even stolen. Several case studies are offered to help operators identify these suspicious situations.
The Alert sets out the legal framework governing sanctions evasion, and what type of activity may fall within the purview of the relevant statutes, including reminders that:
- The Sanctions & Anti-Money Laundering Act (SAMLA) 2018 has extra-territorial application, so that it applies to all persons within UK territory, and to UK persons wherever they are. The Alert emphasizes the responsibility of organizations and individuals to ensure that they have put in place sufficient measures to prevent breaches of financial sanctions, and points the target audience to OFSI’s April 2023 guidance on sanctions implementation for high value dealers, luxury goods markets and art market participants.
- Under the Russia (Sanctions) (EU Exit) Regulations 2019, transacting with frozen assets of a designated person or making resources available to a designated person may constitute a breach.
- The Proceeds of Crime Act 2002 (POCA) mandates the reporting of suspected money laundering. In addition, the Fifth Money Laundering Directive (5MLD) brings operators who deal in the sale or purchase of artwork valued at €10,000 or more within the purview of the Money Laundering Regulations. Since circumvention of the regulations, and sanctions breaches, constitute criminal offenses, the onward transfer of assets could become the proceeds of crime, recoverable under POCA.
- In the United Kingdom, the UNESCO 1970 Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property has been put into effect through the Dealing in Cultural Object (Offences) Act 2003. The Act prohibits the acquisition, disposition, import or export of tainted cultural objects; similarly, the Cultural Property (Armed Conflicts) Act 2017 makes it an offense to deal in cultural property with reason to suspect, or knowledge, that the property has been exported unlawfully.
The Alert further reminds relevant firms and institutions of their reporting obligations under the various sanctions regimes, and the legal mechanisms for fulfilling the reporting obligations. Finally, the Alert evokes the obligations of reporting parties under the Data Protection Act 2018.