As part of the global effort against terrorist financing and tax avoidance, the European Parliament—the legislative body of the European Union—adopted the 5th Anti-Money Laundering Directive on 19 April. It requires “persons trading or acting as intermediaries in the trade of works of art, including when this is carried out by art galleries and auction houses”, to verify the identity of buyers for sales of €10,000 and more, regardless of payment methods. The previous rule only applied to payments made in cash.
The International Confederation of Art and Antique Dealer Associations (CINOA) lobbied against the regulation, and published a position paper earlier in April. CINOA’s secretary general Erika Bochereau sums up the organization’s position: “The amendments are built on the false assumption that the European Union is subject to a high level of trafficking in cultural property that is funding illegitimate interests… Most art market businesses are SMEs with turnovers of well under €1m and this [legislation] would add a disproportionate burden to their time and expenses in administrative terms, while potentially losing them business.” Another issue is the application of the rule to online sales.
The member States now have 18 months to incorporate the Directive into their national legislation – and this will also impact international sellers making business with the EU. The rule will also apply in the UK before its planned date of leaving the European Union in March 2019. This is why the British Art Market Federation is stressing the need to “work with the government to minimize the administrative effect on small businesses.”
