Britain Moves to Regulate Its Art Trade. Bring Your ID.

LONDON — Britain’s embattled art trade, already rattled by the potential fallout from Brexit, is bracing for new rules intended to tackle money laundering and terrorism financing that some fear could further hamstring dealers in the country.

As of Friday, “art market participants” in Britain are subject to the regulations when conducting transactions worth more than 10,000 euros, or about $11,100. Under the rules, they have to register with the government’s tax agency, and dealers and auctioneers must establish the identity of the “ultimate beneficial owner” — meaning both seller and buyer — before entering into a transaction.

The legislation, ratified last month by the British Parliament, introduces largely without modification a European Union directive that is at various stages of implementation in other countries in the bloc.

“This is very serious. It could potentially change commonly accepted market practices,” said Kenneth Mullen, a partner at the London-based law firm Withers. “Due diligence is going to be fundamental. It does seem to mark a shift toward a more regulated industry.”

Martin Wilson, the chief legal counsel at the auction house Phillips, said, “At the heart of the new legislation is a requirement that art market participants must carry out due diligence in relation to the identity of their customers and be able to answer the important question, ‘Who am I really dealing with?’”

Mr. Low (who is said to be in hiding) was a well-known figure, but hundreds of British dealers regularly do business with intermediaries whose livelihoods depend on not revealing the identity of an artwork’s “ultimate beneficial owner.” The legislation could make art advisers in the United States, who are currently not subject to such industrywide regulation, more reluctant to transact with British galleries.

Art traders in Britain have also expressed concern that a requirement to reveal the identity of a third party could affect smaller participants. “A dealer might represent one really good collector, and if the name has to be revealed, that collector could be could be taken by a bigger dealer,” said Nicholas Maclean, a partner at Eykyn Maclean, a dealership based in London and New York.

There are also practical implications for auction houses and dealers in administering the new legislation.

“It’s going to add 30 minutes to an hour of work every day,” said Alon Zakaim, a gallerist in modern and contemporary art based in Mayfair, central London. Mr. Zakaim added that he was nervous about having to comply with the legislation when he takes part in the European Fine Art Fair, or TEFAF, in the Netherlands in March.

“If I don’t know someone, I’m going to have to ask them all these questions,” he said. “They could well feel it’s an invasion of privacy,” he added. “I could lose a client.”

Sahred From Source link Arts

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