We are acting on behalf of executors in the sale of high-value fine art works at a reputable auction house. Do we need to check the identity and source of funds of the unrepresented buyers?
It is highly likely that the auction house is regulated as a "high value dealer", as defined under regulation 14 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
If the auction house falls under the Regulations and is a "relevant person" to whom regulations 27 and 28 apply, it must carry out customer due diligence (CDD) and, where necessary, source of funds checks.
According to section 4 of the HMRC anti-money laundering guidance for high value dealers, both sides of such an auction sale are customers of the auction house for anti-money laundering purposes.
The auction house must therefore carry out CDD on the buyer and the seller.
As the solicitor for the seller, you need to assess the money laundering risk arising from the sale of fine art works through a "high value dealer".
In the absence of any knowledge or suspicion of money laundering, consider whether there is any need for you to carry out CDD checks on the unrepresented buyer.
It will be a matter of professional judgement for you after assessing the risk and acting accordingly.
While every effort has been made to ensure the accuracy of the information in this article, it does not constitute legal advice and cannot be relied upon as such. The Law Society does not accept any responsibility for liabilities arising as a result of reliance upon the information given.
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