Art market financial crime compliance: an evolving landscape

The past year has seen significant developments affecting Art Market Participants ('AMPs') in the UK. Although the art sector's risk rating for money laundering was downgraded and the authorities have acknowledged a need for compliance to be proportionate, there has been significant enforcement activity. Sanctions reporting obligations have also been imposed on AMPs.  

While the new amendments to the Money Laundering Regulations - which largely come into effect on 30 June 2026 - are intended to support a more proportionate, risk-based approach to compliance, the art sector continues to face scrutiny, with a clear trend towards more active supervision and enforcement.  This reflects ongoing concerns around financial crime, particularly the potential for high-value artworks to be used as vehicles for money laundering or sanctions evasion.  

These developments are not unique to the UK.  Related changes are expected in the EU, and in the United States the Art Market Integrity Act would, if it becomes law, bring art dealers and auction houses within the scope of the Bank Secrecy Act, requiring them to implement certain anti-money laundering ('AML') measures, which would align the US more closely with other major art markets.  

Against this backdrop – and following a week when a stolen Picasso was found in a Paris drugs raid, illustrating the links between art and criminality - this article summarises recent enforcement trends and key regulatory developments, and examines the upcoming changes to the UK AML regime. 

Risk assessments: downgraded, but not de-risked 

The 2025 National Risk Assessment downgraded AMPs from 'high' to 'medium' risk for money laundering.  However, this should not be taken as a relaxation of regulatory expectations. This Risk Assessment identified vulnerabilities that make the sector at risk of being used for money laundering; including the ability for artworks to appreciate in value over time, and the fact that artworks can be stored and transported more easily than other high value assets.  HMRC has also identified AMPs as one of three sectors presenting the highest inherent risks for money laundering. 

In September 2025, HMRC published its sector-specific Risk Assessment for AMPs, which must be taken into account when AMPs conduct their own business-wide risk assessments.  The message is clear: notwithstanding the revised risk rating, regulators expect AMPs to have robust and effective compliance frameworks in place. 

Enforcement trends 

HMRC has been active in its audit of art galleries and art dealerships in the UK, levying some significant fines.  Between 1 April 2025 and 30 September 2025, AMPs were the third most heavily fined sector by HMRC, behind estate agency businesses and accountancy service providers. In total, 35 fines were issued against AMPs during this short period.  All but one related to breaches for failing to register at the required time, with one penalty imposed for a failure to notify HMRC of a material change. 

Looking beyond this period, it is apparent that HMRC's focus has evolved.  There is now increasing scrutiny of the effectiveness of AMPs' AML policies and frameworks, and the manner in which these policies and procedures are implemented on a day-to-day basis.  This is illustrated by the penalty imposed on DYS44 Art Gallery Ltd, which was fined £158,679 for extensive procedural failures, including deficiencies in its risk assessments, policies, staff training and due diligence processes (during the period between 1 October 2024 and 31 March 2025).

Enforcement has also extended beyond civil penalties. In June 2025, a UK art dealer, Oghenochuko Ojiri, was convicted under section 21A of the Terrorism Act 2000 - the first prosecution under that provision - which makes it a criminal offence to fail to disclose knowledge or suspicion of terrorist financing in the regulated sector.  

More recently, in Kanbi Contemporary Ltd v HMRC [2026] UKFTT 841 (TC), FTT, the First Tier Tribunal upheld HMRC's penalty levied on the gallery for operating as an unregistered AMP despite the fact that it was a small art business and the Tribunal acknowledged that it took "significant steps" to meet its regulatory obligations. The decision also provides a useful reminder that unprompted disclosures by the unregistered AMP can result in a reduction of 50% being applied to the penalty imposed.

Changes to the Money Laundering Regulations 

New legislation (the 'Amendment') introduces a number of changes to the Money Laundering Regulations which are relevant to AMPs, and which are designed to support a more risk-based and proportionate approach to AML.  

Monetary thresholds

The Amendment replaces references to euros (for example in the definitions of AMP and High Value Dealers ('HVD')) with pounds sterling, generally on a pound-for-euro basis.  Although this does not make a meaningful difference to the value threshold, it removes the administrative burden for AMPs of having to convert transactions expressed in pounds to euros to determine whether the transaction falls within the scope of the Regulations, and aligns the regime more closely with the Artist's Resale Right. 

A more targeted approach to Enhanced Due Diligence ('EDD') 

The trigger for EDD has been refined from transactions that are "complex or unusually large" to those that are "unusually complex or unusually large" (our emphasis). 

This change is intended to reduce inconsistent or overly cautious interpretations and enable AMPs to focus on transactions that genuinely present higher risks, and not those which, although objectively complex, are consistent with a customer's normal behaviour or do not otherwise indicate any material risks of money laundering or terrorist financing when considered in context.

The approach to high-risk jurisdictions has also been narrowed.  Countries on the Financial Action Task Force's 'grey list' will no longer automatically trigger EDD, although this remains an important factor in an AMP's overall risk assessment. Instead, automatic EDD will only apply where the counterparty is based in a country on FATF's 'Call for Action' list (i.e. the 'black list'), which is, at the time of writing, limited to North Korea, Iran and Myanmar. 

New Guidance 

The Explanatory Note to the Amendment also indicates that revised sector guidance is expected, which will be approved by the Treasury, and which it is anticipated will replace the current BAMF Guidance.

AMPs should ensure that their policies and procedures are updated in accordance with the Amendment and that staff are trained on the revised framework. 

Sanctions: a parallel and expanded regime

The sanctions regime is separate from an AMP's obligations under the Money Laundering Regulations, but they have become an increasingly significant area of regulatory risk for AMPs. OFSI's June 2025 Threat Assessment warned that high value goods are being used by sanctioned persons to evade sanctions regulations.

Since 14 May 2025, AMPs and HVDs have been subject to financial sanctions reporting requirements.  AMPs must report to the Office of Financial Sanctions ('OFSI'), as soon as practicable, if they know or reasonably suspect that a person is subject to financial sanctions imposed by the UK government, or has committed breaches under the UK sanctions regulations (for example by dealing with frozen assets or providing goods to a sanctioned person), and the information came to it "in the course of carrying on its business".  Failure to comply is a criminal offence, and may also result in significant civil penalties.  

This reporting obligation is in addition to the requirement for an AMP to submit a suspicious activity report to the National Crime Agency where it knows or suspects, or has reasonable grounds for knowing or suspecting, that there has been money laundering or terrorist financing activity.

OFSI published updated guidance for AMPs and HVDs on financial sanctions on 12 May 2026.  The Government also published its strategic approach to sanctions enforcement on 8 May 2026, which makes it clear that, for civil enforcement, OFSI will assess any potential breach on a strict liability basis. This means that, subject to certain exceptions, there is no requirement to prove that a person had knowledge or reasonable cause to suspect they were in breach. Having inappropriate compliance systems in place is listed as an aggravating factor, while prompt voluntary disclosure and robust compliance systems are listed as potentially mitigating factors.

What should AMPs be doing in practice?

These developments point to a clear expectation that compliance is embedded in day-to-day operations.  AMPs should, in particular, ensure that: 

• their AML Policies are updated in light of the changes to the Money Laundering Regulations;
• they conduct regular reviews of their Risk Assessments, including in the context of HMRC's latest sector risk assessment;
• they are screening all clients and intermediaries against the UK Sanctions List, and ensure that any systems that previously relied on the OFSI Consolidated List (which was closed on 28 January 2026) are instead drawing data from the UK Sanctions List;
• appropriate procedures are in place for ongoing screening beyond the onboarding stage; and
• they have watched HMRC's new training video ("Framed") which highlights how an AMP can find itself involved in money laundering. The video and discussion notes published by HMRC are useful for internal training.

Finally, November marks the end of the twelve-month transition period for Companies House's identity verification requirements.  AMPs should ensure relevant individuals have completed the verification ahead of the deadline.

Our lawyers can assist our clients with policy and procedure updates, and ongoing compliance matters.