The Treasury has recently confirmed that artists selling their own work to collectors will not be classified as “Art Market Participants” (AMPs) under the UK’s new anti-money laundering regulations. As a result, artists are not subject to the regulations and need not be concerned by the administrative obligations they impose. HMRC released an official statement clarifying the previously ambiguous position of artists:
“HM Treasury have recently confirmed that it is not intended that artists — persons who create original art — are in scope of the AMP definition and therefore they are not required to register as an AMP.”
The European Union’s Fifth Money Laundering Directive, which came into effect in UK law on 10 January 2020, applies to all AMPs. Such participants are defined as a firm or sole practitioner who trades in, or acts as an intermediary in, the sale or purchase of works of art where the value of the transaction amounts to €10,000 or more.
The regulations place a number of onerous burdens upon AMPs, who have been given until 10 June 2021 to become fully compliant and register with HMRC. Most notably, AMPs are required to carry out rigorous customer due diligence (CDD) to verify a client’s identity and source of funds in advance of any transaction. This represents a major shift in an industry that has traditionally respected anonymity and discretion in high-value transactions.
The news that artists are not subject to the anti-money laundering regulations is certainly welcome. This means that artists need not incur a £300 fee to register with HMRC (refunds are available to those who already have), nor will they have to adhere to the potentially expensive and complex CCD requirements. This will come as a relief to artists, many of whom would have struggled to meet these practical demands and may have been worried about the severe penalties for non-compliance.
After lobbying from art organisations, government has made last-minute decision that creators who sell their work direct to clients will not be classed as "Art Market Participants"