NCA issues amber alert on art world
By Law News
The National Crime Agency (NCA) issues a January 2024 alert, cautioning UK regulated businesses, including art storage facilities, about the risk of criminal exploitation by sanctioned high net-worth individuals
The National Crime Agency (NCA) has recently issued an amber alert, focusing attention on the vulnerability of the art world to criminal exploitation by high net-worth individuals subject to sanctions. While this alert specifically targets the art sector, Martin Cheek, managing director of SmartSearch and a qualified lawyer, emphasizes that all UK regulated businesses, ranging from accountancy firms and financial services to property and legal services, should be vigilant and enhance their business processes to guard against criminals evading sanctions and laundering illicit proceeds.
The NCA's alert highlights the risk associated with art storage facilities, particularly in relation to financial criminals like Russian oligarchs. These individuals often use specialist storage facilities for various purposes, such as secure storage of art as an investment or for tax benefits. Cheek underscores the urgency for regulated industries to recognize the broader threat of financial crime and underscores the necessity of implementing robust processes and procedures.
The key message from the NCA alert resonates across various sectors, emphasizing the importance of conducting regular due diligence checks to comprehend any changes in a client's circumstances or those of the individuals they represent. Cheek stresses that client checks at onboarding, coupled with continuous monitoring, serve as effective deterrents against criminals seeking to exploit vulnerabilities.
Regulated businesses are urged to remain vigilant for changes in client circumstances and to conduct daily checks against international sanctions. Additionally, the alert warns against the use of front or shell companies, as well as complex corporate or trust structures, which can obscure the identification of ultimate beneficial owners.
Anti-money laundering (AML) monitoring of clients forms an integral part of the anti-money laundering procedures mandated for all regulated businesses. These organizations must adhere to due diligence procedures as part of their Know Your Customer (KYC) processes. This includes AML checks to identify and verify the client, Potentially Exposed Person (PEP) and sanction screening. If a client's name aligns with a PEP, sanction, or Relative and Close Associate (RCA) list, enhanced due diligence becomes necessary to assess the level of risk associated with the client.
Cheek concludes by noting that, presently, over 2,000 individuals and entities fall under UK sanctions related to the Russian regime. As global complexities evolve, regulated businesses must remain vigilant and proactive in their efforts to combat financial crime, reinforcing their commitment to due diligence and compliance with international sanctions.