U.K. authorities issued an amber alert this week highlighting sanctions evasion and money laundering risks that could impact companies in the art storage sector.
The alert was issued as criminals continue to use the art industry to engage in illicit activities, including sanctions evasion, money laundering and cultural property trafficking. The guidance noted that clients of art storage facilities could be based in the U.K. or overseas, including in high-risk countries like Russia.
“Any facility or space that is used to hold, store or move artworks, antiques, antiquities and collectibles …[including specialist] warehouses, auction houses, museums, galleries, and art dealerships” should all be aware of the recommendations in the alert and review any risks in their business relationships and partnerships.
Here are some of the key takeaways highlighted in the alert, which serve as a reminder on due diligence checks and reporting obligations:
The U.K. alert serves as a continued reminder of the seriousness of the cost for those engaging with the art storage sector that fail to conduct proper KYC and due diligence checks.
Freya Page is Director of Global Outreach at Kharon. She has over a decade of U.K. government experience and was a founding member of OFSI, having undertaken roles in policy, enforcement, outreach and guidance.
The alert was issued as criminals continue to use the art industry to engage in illicit activities, including sanctions evasion, money laundering and cultural property trafficking. The guidance noted that clients of art storage facilities could be based in the U.K. or overseas, including in high-risk countries like Russia.
“Any facility or space that is used to hold, store or move artworks, antiques, antiquities and collectibles …[including specialist] warehouses, auction houses, museums, galleries, and art dealerships” should all be aware of the recommendations in the alert and review any risks in their business relationships and partnerships.
Here are some of the key takeaways highlighted in the alert, which serve as a reminder on due diligence checks and reporting obligations:
- • Changes in client circumstances: Are you checking international sanctions lists on a daily basis?
- • Attempts to transfer artwork or cultural property ownership to a family member, close contact, business associate or other intermediary: Why is it being transferred? Do they have the relevant permissions from the Office of Financial Sanctions Implementation (OFSI)?
- • Attempts to sell artwork or cultural property quickly, or move it to another jurisdiction: Has the provenance been verified? Has the price been artificially inflated or deflated?
- • Use of front or shell companies, or complex corporate or trust structures where the Ultimate Beneficial Owner is unclear: Does the company have a website containing little information? Does the company have a suspicious business model?
- • Request to store objects that are stolen or subject to restrictions: Are lost or stolen art registers being checked regularly against the assets under your organization's control?
- • Use of financial services to acquire, sell or ship artworks or cultural property in and out of specialist storage facilities: Is there an intermediary in the chain, obscuring either end of the business chain from each other? Is there any unusual activity or unusual turnover?
The U.K. alert serves as a continued reminder of the seriousness of the cost for those engaging with the art storage sector that fail to conduct proper KYC and due diligence checks.
Freya Page is Director of Global Outreach at Kharon. She has over a decade of U.K. government experience and was a founding member of OFSI, having undertaken roles in policy, enforcement, outreach and guidance.
