When art meets regulation: the evolving landscape of compliance and enforcement

October has witnessed a flourishing art fair season, with Frieze, Frieze Masters, 1:54, and PAD among the standout events that animated London’s art scene alongside the modern, impressionist and contemporary auction sales. These are key moments in the art world calendar that see a global community of art buyers, artists, advisors, collectors, influencers and critics congregate in London. Combined with a wealth of exhibitions at museums and galleries, this is what defines London as a cultural destination and a long-standing hub for the trade in art.

Those who operate and thrive in the art world need chutzpah and brio – beyond the glamour and aesthetics of working with and around art, it is a tough, risky environment. Over the last year or so, the art world has been buffeted by world events. The trade in art has always been something of a "canary down the mine," sensitive to the wider dramatic fluctuations in society and the financial world. However, as those who weathered the financial crisis of 2008 will know, these patterns are cyclical – there are always opportunities, ups become downs and downs become ups, and the art market is no different with its own complex game of snakes and ladders tied to the wider financial ecosystem. 

Along with those sectors that fall under the wider umbrella of the creative industries, the art market continues to be a significant contributor to the UK's economy. The Art Basel & UBS Art Market Report 2025 by Arts Economics reported in 2024 that sales in the UK art market reached $10.4 billion, "reclaiming second position globally due to the poorer performance of sales in China…the UK market experienced cooling in the high-priced segments, leaving it 15% below its pre-pandemic size in 2019, though still 5% above 2020 values." In the parallel world of luxury assets, which represents a broader church including automobiles and wine, the UK luxury goods market was valued at $19.25 billion for 2024. The sector body and representative organisation for the British luxury industry Walpole also produced a report in 2024 that valued the luxury sector at £81 billion.

The structure and peculiarities of the art market

Alongside the high value of the trade in art comes a number of anomalies in the way business is done and the nature of the assets - the art itself. To the outsider, the operation of the art market can appear alien and may also be a cause for suspicion. The call for the regulation of the art market has surfaced on many occasions, and such points of debate include:

• Art world relationships (such as gallery to buyer, or art advisor to buying or selling client) are typically more than transactional. Long-standing relationships often blur into close associations and friendships that are honed over years.
• Deals are typically international and layered with participants between the owner (seller) and the ultimate buyer sides. Those in between may be advisors/agents, who are acting on either side of the transaction and will receive a commission for their work. Advisors/agents will typically have agency obligations, alongside introducers who have a more incidental role with no agency obligations.
• Art transactions are typically discreet; the layered structure protects identities – those selling may not want the fact a sale is taking place to be known. There are multiple legitimate reasons for this: privacy, reputation (deaccessioning/depletion of assets) and security - pinpointing collectors and the whereabouts of other works.
• Artworks at the top end can command high values – values can fluctuate, and the concept of value (retail value, market value) is a complex exercise.
• Artwork is portable and globe-trotting. At a high end, it typically moves around the globe as it is exhibited, loaned, traded and stored.
• Contracts – documentation evidencing transfer of title and around sales could historically be thin on the ground. The position has now progressed with sales documented and recorded in various forms at all levels of the market. 

The business of buying and selling art, antiques and cultural property attracts the flamboyant, and creative – reflected at times in the complex and creative selling arrangements that enable those in it to survive on increasingly narrow profit margins. However, it does not necessarily mean that those arrangements are fraudulent, or a conduit for money-laundering or wider crime. To the uninitiated, the sector has all the ingredients to provide a perfect recipe to support crimes such as money-laundering and fraud: high value portable assets, glamour, high-net worths, and a purported lack of regulation – all of which feed into this narrative. 

Undoubtedly, the rare cases that receive heavy media attention such as that of Inigo Philbrick and the more recent prosecution of Oghenochuko Ojiri (now listed in the Court of Appeal on 29 October 2025) perpetuate this perception. It is important to note that these cases are the exceptions. For the majority of artists, art agents and dealers, doing the deal and making a living is the driver.

The 5th Anti-Money Laundering Directive landed in this unique world in 2020 and with it came obligations that align with the regulatory framework regarding anti-money laundering that "art market participants (AMP)" must adhere to. The inclusion of AMPs was a clear delineation of art and the business of art as a potential conduit for crime and money laundering. The directive meant that those who fell within the definition of an AMP and whose deals met the qualifying criteria now had legal obligations, including to comply with registration, record keeping and active monitoring of the sources of wealth for clients. Its arrival was as welcome as an uninvited guest at a dinner party, seen as yet another cost and obligation for those affected. 

To the credit of those involved, dialogue between authorities and stakeholders facilitated the bringing together of two very different worlds at its inception, enabling authorities to understand the patterns of trade and how practitioners operate, and to iron out some fundamental questions such as: did this apply to artists who were selling direct? How were linked sales defined? Did it include ancillary luxury assets? (The active dialogue was an improvement on the position with regards the implementation of Artists Resale Rights Regulations in 2006, and the lifting of the ARR derogation on artists' estates in 2012). The UK’s Anti-Money Laundering (AML) Guidelines were first published in February 2020 and updated in 2023 in association with the British Art Market Federation to provide more specific and granular guidance as to who the AML regulations applied to and what activities were captured.

Enforcement and emerging challenges

Despite some initial activity, implementation, registration and enforcement of the regulations somewhat slowed due to the onset of the pandemic but has subsequently and notably picked up the pace. Art market participants, both large and small, have been caught out and fined for technical breaches such as failing to register, failing to actively administer and perform the ongoing obligations or have appropriate infrastructures in place. These are not money laundering offences but are nonetheless damaging for those identified in terms of reputation and finances. 

The annual number and overall value of regulatory fines for breaches of AML regulations in the UK (non-art market specific) has, over the last few years, seen a rise in the number of fines but with a diminishing value. Spotlight on Corruption's Anti-Corruption Enforcement Tracker provides the following figures:

• 2023/2024: number of fines 1,227, overall value of fines £41.5 million
• 2022/2023: number of fines 1,007, overall value of fines £196.5 million
• 2021/2022: number of fines 614, overall value of fines £238.8 million
• 2020/2021: number of fines 364, overall value of fines £109 million

Regardless of the size of your art business – whether it’s a one-person operation (which may only have one or two transactions that meet the necessary criteria) or a global gallery – the same obligations apply with regards to record keeping and the possibility of an intervention (inspection from the authorities). This blanket enforcement has caused some within the industry to revisit questions of proportionality. 

The full impact of the regulations on the UK art market has yet to fully unfold. Anecdotally, some collectors have baulked at providing their personal information to third party AML service providers who work with gallerists, due to concerns regarding security. It is also of note that other jurisdictions do not have such stringent controls, which could put the UK at a competitive disadvantage. 

A further consideration for AMPs is the sanctions regime. In January 2024, the National Crime Agency issued an amber alert to those within the art world, particularly to those operating storage facilities with regards to the risk of artworks being used as a means to avoid sanctions regimes. 

Key considerations

As it stands, the key initial considerations for those operating in this sector are:

• Status:
 – Is the business, and business owner, an art market participant under Regulation 14(1)(d)?
 – This applies for those:
  • trading in or act as an intermediary in the sale or purchase of works of art worth €10,000 or more (in a single or linked transaction); or
  • operating a freeport where works of art valued at €10,000 or more are stored for a person or linked persons.

• Scope:
 – Do the items traded fall within the definition of a “work of art” under s 21 of the Value Added Tax Act 1994?
 – Antiques (e.g. furniture, early cars) and collectors’ items (e.g. coins, ethnographic pieces, stamp collections) are not included.

• Regulatory coverage:
 – Does the work fall within the scope of regulated activity under the Money Laundering Regulations?

• If qualifying as an AMP:
 – Has a Money Laundering Reporting Officer (MLRO) been appointed?
 – Are risk assessments and records properly maintained?
 – Is registration with HMRC up to date?
 – Have all relevant staff received AML and sanctions training?
 – Is there a written and up-to-date AML policy in place?

• For each transaction:
 – Does it meet or exceed the €10,000 threshold (alone or across linked transactions)?
 – Has the due diligence on the buyer and the source of funds been completed?
 – Has the source of wealth been verified and supported by evidence?

• Sanctions:
 – Have all parties been screened against sanctions lists?
 – Is the level of due diligence proportionate to the risk?

Anti-money laundering regulations are now firmly part of the artworld landscape, however it may be that a more harmonious and proportionate approach to enforcement will support implementation that better supports the creative industries.

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