Guidance

Understanding money laundering risks and taking action for art market participants

Updated 18 September 2025

About this risk assessment

This risk assessment by HMRC is prepared and made available to you under Regulations 17 and 47 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (referred to as ‘the regulations’ throughout this guidance).

It tells you about the risks that your business might face as an art market participant (AMP).

There is separate guidance to support art market participants (AMPs) in complying with their obligations under the regulations.

In line with Regulations 18 and 18A of the regulations, all AMPs must carry out a risk assessment to identify and assess the risks to their business for:

• money laundering
• terrorist financing
• proliferation financing

You must take this risk assessment into account when carrying out your business’s own risk assessment.

You must also read and consider other relevant documents such as:

• the national risk assessment of money laundering and terrorist financing 2025 (We strongly recommend you read the whole document as important risk information is likely to be missed if only parts of the National Risk Assessment (NRA) are considered. In particular, you should read and consider Section 2, 3 and 4)
• the national risk assessment of proliferation financing published in 2021
• guidance produced on the Financial Action Task Force (FATF) website

As an AMP you must take appropriate steps, taking into account of the size and nature of your business, to identify and assess the risks your business may be exposed to.

You must consider the following risk factors:

• your customers — whether they are private individuals, companies, trusts, or others
• the countries and geographical areas of your operations, including where your customer is based or the country the art is exported to
• your products or services, including the types of art you sell and whether any are particularly attractive to criminals seeking to launder money or fund terrorism
• your transactions, including how you are paid and the types and values of those transactions
• your delivery channels, including how you interact with your customers, whether in person, remotely, or through an intermediary

The steps you have taken to identify and assess these risks must be properly reflected in your business’s risk assessment and you must keep an up-to-date record in writing of these steps. You must be able to provide an up-to-date copy of your risk assessment, and the information you have used to carry out that risk assessment to HMRC when requested.

AMPs are at a medium risk of money laundering. You must take a risk-based approach to effectively manage and mitigate risks your business faces. An effective risk-based approach will require you to carry out your risk assessment in line with your business model and the listed risk factors.

This risk assessment by HMRC is intended to help you to identify and assess the risks that your business may be exposed to. It also highlights where that level of risk may be increased or decreased depending on your business model. When you have identified the risks that are relevant to your business, you must put in place policies, controls and procedures to effectively manage and mitigate those risks.

You must apply the appropriate measures as set out in the regulations, particularly where there is a high or higher risk of:

• money laundering
• terrorist financing
• proliferation financing

If you begin to buy or sell different types of art, or the value of the art you sell changes or how your customers pay, you must make sure your risk assessment reflects these changes. Your policies, controls and procedures must also be updated to reflect how you will effectively manage and mitigate any additional or new risks.

Risk characteristics

An AMP means anyone who as part of their business:

• trades in or acts as an intermediary in the sale or purchase of works of art and the value of the transaction, or series of linked transactions, is of at least 10,000 euros
• operates as the operator of a freeport or any other business by way of business and stores works of art in the freeport and the value of the art is 10,000 euros or more

A work of art is defined in the Value Added Tax Act 1994 section 21(6) to (6B) for the purpose of section 21(5)(a) of that Act. This is summarised as:

• a painting, drawing, collage, decorative plaque or similar picture
• an original engraving, lithograph or other print
• an original sculpture or statuary
• a sculpture cast
• a tapestry or other hanging
• a ceramic
• an enamel on copper
• a photograph

A work of art is not:

• a technical drawing, map or plan
• any picture comprised in a manufactured article that has been hand-decorated
• scenery (including backcloths)

As an AMP you must submit a Suspicious Activity Report (SAR) to the National Crime Agency (NCA) as soon as possible if you know or suspect that a person is engaged in or attempting money laundering or terrorist financing.

Find out how to submit a Suspicious Activity Report on the NCA website.

Money laundering

AMPs are assessed by the National Risk Assessment 2025 (NRA 2025) as facing a medium risk of money laundering. This score has decreased from a high risk for money laundering in the previous NRA due to HMRC’s improved understanding of the risk in the sector and improved supervision. However, there remains a risk of the sector being used for money laundering.

The high volume of funds moveable in a single transaction, the ability of artworks to increase in value over time, alongside the enjoyment or status gained by owners makes art appealing to both legitimate and criminal investors.

The art market is diverse — whilst some firms mostly buy or sell to longstanding clients they know well, some operators frequently buy or sell in private or through intermediaries, decreasing visibility of the true buyer or seller of the artwork. Whilst there are legitimate reasons for operating in such a way, this trading environment can be preferred by those seeking to launder money and hide their true identity. Even where an AMP has long standing relationships with clients, they should monitor changes of circumstance or behaviour.

Any transactions carried out using cash or crypto assets are potentially higher risk due to the ease in obscuring the source and ownership of funds.

The value of art can vary significantly, making it attractive to varying levels of criminality and a useful mechanism to store value over a period of time. Price fluctuations in the value of art allow both for profits to be made by sale of the art and to conceal the movement of value where criminals manipulate the price of artwork.

Terrorist financing

AMPs are assessed by the NRA 2025 as low risk for use for terrorist financing purposes. Overall, the art sector appears to be unattractive to terrorists as the buying and selling of artwork involves time consuming processes and requires high levels of liquidity.

While the sector can facilitate the movement of large amounts of money in a single transaction, high-value purchases typically require knowledge of art and a trusting relationship within the sector.

However, it is possible that the level of risk that the sector may be seeing may be underreported. Since 2020, there have been two linked cases of terrorist financing in the UK AMP sector.

Proliferation financing

Proliferation financing is defined as providing funds or financial services for use in the manufacture, acquisition, development, transfer and shipment of chemical, biological, radiological or nuclear weapons (also known as weapons of mass destruction) and their delivery systems. The measures exist to prevent the build-up of weapons of mass destruction by certain regimes.

The UK proliferation financing sanctions regime highlights designated people and businesses sanctions for proliferation financing purposes. It includes specific sanctions against chemical and nuclear weapons.

Current sanctioned businesses, individuals and countries include:

• Iran
• North Korea
• Russia
• Syria

The UK proliferation financing sanctions are regularly updated, so it is important to be aware of any changes and additions by checking the UK sanction list.

There is a risk of proliferation financing in any transaction or business relationship linked to a regime sanctioned for proliferation financing, including any sanctioned:

• individual or entity
• government
• government owned entities
• PEPs

These transactions and customers should be treated as high risk.

It is possible art could be sold to fund proliferation financing. As part of your risk assessment, and policies, controls and procedures you must be aware of the proliferation financing risks as detailed in the national risk assessment of proliferation financing.

HMRC-supervised AMPs

The range of services offered by AMPs can include higher and lower risk activities, and it is important that businesses understand and properly appraise the risks presented by activity and each customer.

HMRC is the default anti money laundering (AML) supervisor for AMPs.

Risk Indicators

It is vital that AMPs understand and meet their obligations under the Money Laundering Regulations (MLRs) to protect themselves, their families and their communities from the dangers of infiltration by criminals.

Any weakness in the controls the business uses may be exploited by criminals who will seek to use, coerce or control the AMP to move more of their illicit money. Such money is often earned from activities that cause significant harm to society, such as drug dealing, people smuggling or modern slavery.

It is important that a business carefully assesses and documents the specific risks that business faces and establishes and keeps up-to-date policies, controls and procedures to address these. These must be effective to help prevent money laundering or terrorist financing through the business.

Risks common to all AMPs

The key cross-sector risks for all AMPs include:

• unusual sales or purchase activity
• anonymity
• face-to face sales compared to other sales
• high-risk jurisdictions
• off-record sales

A potential sale or unusual purchase of art

This could be the art, the delivery method or payment arrangements do not:

• appear consistent with the normal business practices for the type of business concerned
• have a valid commercial reason
• make economic sense

Anonymity with the buying and selling of artwork

The art market has traditionally operated in a way that provides anonymity with the buying and selling of artwork. It is often conducted in private or through third parties in order to remain anonymous and conceal the beneficial owner.

Whilst there are legitimate reasons for operating in such a way, this trading environment can be preferred by criminals and those seeking to launder money. It can help to hide their true identity in order to shield their involvement and their source of funds during art transactions. This could be to:

• purchase art with illicit funds
• purchase art by someone sought by law enforcement
• hide beneficial ownership to evade tax
• use art as a stored value which is easy to transport and trade

Moving such large amounts of currency through the banking system would otherwise raise suspicion.

Payment from high-risk jurisdictions

High-risk jurisdictions are more likely to be linked to money laundering and terrorist financing.

You should carefully consider the purpose and nature of any transaction with a business from a high-risk jurisdiction.

There are risks for AMPs in relation to the country that their customers are operating in. Some jurisdictions are deemed higher risk than others and have poor or insufficient money laundering and terrorist financing measures.

Other risks in a jurisdiction include:

• levels of bribery and corruption
• tax evasion
• capital flight
• conflict zones
• organised crime activity

It is not only the country that the customer is based in that may be the risk, but it could also be neighbouring countries as money laundering or terrorist financing often involves the movement of funds across borders.

Information about high-risk jurisdictions is widely available, which is detailed from several open-source documents and media.

All AMPs will need to decide their own level of comfort when assessing jurisdictional risk. The business will be expected to develop and maintain awareness around this topic and incorporate it into their written policies and procedures and risk assessment.

Remote sales

Face-to-face contact with a customer can give you greater assurance that the customer is who they say they are. It offers some form of real relationship and an opportunity to interact with the customer.

Transactions made online, over the phone or through an intermediary:

• reduce exposure to the customer
• decrease effective identification
• increase vulnerability to money laundering and terrorist financing

High-end, luxury-focused AMPs are in an excellent position to carry out effective customer due diligence (CDD) where their business model includes cultivating and building relationships with their customer.

Criminals take advantage of unwitting legitimate businesses

Talking to your customers about the reason for the purchase or sale of the art should help to determine whether there is a legitimate reason for the sale and whether anything appears unusual.

The customer asks for the art to be delivered in an unusual manner or to an address that is not their own

There may be a genuine reason for this, but it is important to ask questions to decide if the transaction should go ahead.

A Suspicious Activity Report on the NCA website should be filed if it is deemed appropriate.

A business wants to conduct an ‘off the record sale’

The cash sale or purchase of art for an ‘off the record sale’ is not likely to have:

• been recorded in that business’ records
• a proper audit trail

If offering payment this way, the business is also likely to be using cash for other purposes, such as paying workers cash in hand so avoid paying tax and National Insurance on the wages.

A new customer

Some customers may have little or no trading history and no trade references. Consideration would need to be given to whether this customer is genuine or a front for a business that is possibly involved with money laundering.

Risks relating to the Money Laundering Regulations

Risk indicators relating to elements of the Money Laundering Regulations include:

• reliance
• linked transactions
• data protection
• online verification
• un-registered AMPs
• online sales
• rental of art and interior designers

Customer due diligence (CDD) and reliance

As part of your CDD measures, you can rely on CDD carried out by an appropriately supervised entity in certain circumstances.

We have noted some misinterpretation of the use of reliance in the art industry.

Reliance is covered under Regulation 39 of the MLRs. There are set criteria that must be adhered to. The business on whose CDD you are relying on must either be carrying on business:

• in the UK and is subject to the requirements of the MLRs
• overseas and subject to equivalent legislation in another country

You must immediately obtain all the information needed from the third party being relied on to satisfy the requirements of the regulations around CDD in relation to:

• the customer or the beneficial owner
• anyone acting on behalf of the customer

You will need to know the identity of the customer or beneficial owner and what level of CDD was conducted. You will also need to have an agreement in place with the third party that all CDD documents will be provided immediately on request.

On receiving a request from you, the third party must immediately supply copies of any identification and verification checks done and any other relevant documentation.

Art and linked transactions

For AMPs, a linked transaction can occur when:

• a transaction over 10,000 euros appears to be have been deliberately broken down into several smaller payments so there are multiple payments against a single invoice (this does not include payments made through a finance or credit arrangement)
• several works of art each valued below 10,000 euros are sold at the same time together so the total sale price is over the AMP threshold

For example, an art gallery is selling paintings from one artist at £6,000 for each painting. The same customer buys 3 paintings costing £18,000 at the same time. The sale is therefore above the threshold and subject to MLR requirements. It would not be appropriate to issue separate invoices for each piece of artwork and claim they were separate sales.

Data protection

Under Regulation 41 personal data obtained by you for the purpose of the regulations, for example, for CDD purposes, may only be processed for the prevention of money laundering and terrorist financing unless use of the data is allowed by other legislation.

Dealing with an unregistered AMP

As part of your CDD measures, if you are dealing with another AMP, you should check whether the business is registered with HMRC for AML supervision. If it is not, you should not continue dealing with that AMP.

You should consider submitting a Suspicious Activity Report to the National Crime Agency.

You can also report them to HMRC.

Online sales verification

The art industry has changed due to the impacts of COVID with more sales being conducted online and remotely. Verifying identity for online sales is different compared with face-to-face transactions as you do not have that interaction with the customer.

After receiving the identity documents for online and remote sales you need to verify them. It is recommended that you conduct a video call to ensure the person you are dealing with is:

• genuine
• the person in the identity documents

Renting of art

If you are renting art, you could still fall within the scope of an AMP.

If you are renting art with no obligation to buy, then you are not an AMP.

It will depend on the contract that is in place and might depend on whether there is an obligation to buy the painting at the end of the rental period. If the rental amount is inflated to reduce the final sale amount, HMRC could see this as a way to avoid the requirements under the MLRs.

Interior designers

An interior designer could be an AMP as they could be acting as an intermediary. This would depend on what the interior designer’s working agreement is with their customer.

If the interior designer is buying the art on behalf of their customer, they will have to declare who their customer is to the selling AMP, so the correct CDD is carried out.