Urban Art Association

In plain English can someone explain what this means? For example I have a print you want to buy from me for £20k... how do we do this?

So I assume this counts for private sales?

How does this work for say selling something compared to buying something? Who is the emphasis on to do the checks in a private sale?

From my point of view, I'm not sure i'll be buying something over £8500. However if I do, i imagine that it'll be from a gallery rather than an individual. Although some of the work we have has gone up in value to over £8500. Again, I imagine that i'd be dealing with an auction house anyway. So I suspect that it'll be up to the business / institution to do the checks.

I may very well be wrong though and not have a clue what i'm talking about. It'll be interesting to see how it impacts things and the market.

would you accept £19k??

It’s a hypothetical question... how does it work? And for clarity my Sale Ends is going nowhere anytime soon.

In short, it shouldn't apply to the majority of private sales - only intermediaries such as galleries and private dealers.  However, there is a risk that any non-art professional who buys/sells art to a significant extent as part of a side-hustle (e.g. a serial flipper on here or someone with an eBay store as a part-time hobby) could be construed as trading in goods by way of a business and therefore be caught by the regulations.

To be specific... the obligation to apply enhanced due diligence falls under Regulation 33 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017/692 ("2017 Regs").  The 2017 Regs are being amended by this new legislation in a few days time.

The obligation under Regulation 33 of the 2017 Regs applies to "relevant persons".

Regulation 3(1), by reference to regulation 8(2) in its amended form will expand out the various categories of "relevant persons", to include "art market participants".

Art market participants are defined in the amended Regulation 14(1) of the 2017 Regs as follows:

"a firm or sole practitioner who—

(i) by way of business trades in, or acts as an intermediary in the sale or purchase of, works of art and the value of the transaction, or a series of linked transactions, amounts to 10,000 euros or more; or

(ii) is the operator of a freeport when it, or any other firm or sole practitioner, by way of business stores works of art in the freeport and the value of the works of art so stored for a person, or a series of linked persons, amounts to 10,000 euros or more".

This shouldn't catch the average Joe Bloggs seeking to sell his signed Banksy print that brought back in the 2000s and has decided to sell as a one-off sale to raise some cash.  However, it may well catch an individual who regularly buys and sells similar if the trading activity amounts to a business.  Whether it does or not will always turn on an analysis of the specific facts.

One might consider whether this forum constitutes an "intermediary" which would be caught by the rules.  From a quick ponder and without a huge amount of background info (I've never bought/sold through this site), I'd say probably not.  It can be contrasted with somewhere like New Art Editions, which is an intermediary in the true sense of the word, seeking to connect buyers with sellers through active email marketing and taking a commission).  But people will need to be careful and start thinking about these things more...

There should be some helpful industry guidance in the coming months from the Joint Money Laundering Steering Group (JMLSG) which might shed more light on this and other issues in the amended 2017 Regs.

You'll also need to see Banksy's driving licence

So just buy two artworks for 5K each if one doesn't want to go over the 10K limit.

All this will do is make some people give under the table cash part payments to some sellers.

Next move will be that the tax man gets hold of owners registered names and addresses.

Then one day, knock knock on the door. A man with a clipboard arrives at the house and says, according to our records, you became the registered owner of two B****y prints in 2015. Their combined value in 2015 was 40K yet you only declared earnings of 30K for that year.