Despite new requirements coming into force more than a year ago, many arts organisations remain woefully underprepared. Mary-Alice Stack offers some guidance.
Setting up and running any kind of creative business is full of challenges. Quite apart from the challenges of defining, developing, and producing whatever it is you are in the business of selling, there are a myriad of other considerations and critical issues. Leaps of faith must be made along the way in order to succeed. From GDPR to health and safety, it’s essential that business leaders understand the regulations in their sector and access the support and guidance they need to ensure compliance.
Risk and responsibility
Back in January 2020, just before the start of the Covid crisis, a new piece of legislation quietly came into effect in the UK. The UK’s anti-money laundering regulations were the fifth in a series of EU directives designed to crack down on funding for criminal enterprises – a growing problem for governments and law enforcement agencies worldwide. They have now been expanded to include single or linked transactions relating to art sales of more than €10,000 (c.£8,500).
This probably sounded innocuous at the time. Most individual artists and a sizable proportion of the UK gallery sector are unlikely to be making sales of that magnitude on a regular basis. The fact remains, however, that understanding of the purpose of the regulation and the risks and responsibilities of operating as ‘art market participants’ (AMPs) is critical, no matter how infrequently those high value sales occur. For example, failure to comply could result in fines, or at worse, criminal prosecution for the business and its nominated officer. This is particularly important for contemporary artists and craft-makers who are increasingly involved in marketing and selling direct to clients rather than relying on gallery or dealer representation.
The disruption of the pandemic gave a little breathing space to the sector as HMRC delayed last summer’s deadline for registering as an AMP until 10 June 2021. That deadline is now fast approaching and, despite the regulations having come into force over a year ago, there is still a considerable lack of knowledge and confidence across the visual arts sector about the regulations, who is affected, and what practical steps need to be taken to ensure compliance.
As a Sector Support Organisation, Creative United’s objective is to ensure that everyone involved in the presentation and sale of art works, including our own network of Own Art member galleries, is clear about the anti-money laundering regulations and can access practical advice to implement the necessary systems and processes to meet their obligations as AMPs. With the support of Creative Scotland and Arts Councils in England and Northern Ireland, we’ve teamed up with leading law firm Kingsley Napley to provide a free training programme: AMLD5 and the Art Market.
As Nicola Finnerty, Partner at Kingsley Napley, explains: “There are potential civil and potentially criminal consequences for non-compliance, so it is important for AMPs to be aware of these obligations and implement appropriate processes and procedures. The arts will be under greater scrutiny as a sector after the June deadline and HMRC will be looking to make examples of those not following the new rules. The training will help navigate the new AMLD5 landscape and demonstrate why and how AML compliance can become part of the culture of every arts-based organisation going forward.”
Support to grow
Data collected by Creative United since we announced the free training programme shows that two-thirds of the 270 artists and galleries involved to date consider their knowledge and preparedness to respond to the regulation is ‘poor’ or ‘very poor’. That’s something we hope to address through the training programme and with the support of the team at Kingsley Napley, who is leading our workshops throughout April and May, and provide toolkits and other resources that will be made available for free to anyone who needs guidance.
AMLD5 and the Art Market is just one training and support programme we run to help creative enterprises develop and grow through effective business planning and innovative approaches to increasing their sales and social impact. Creative United’s business support programmes, along with the services offered by industry bodies and trade associations, are often the first port of call for organisations and individuals looking for sector specific help and advice.
While the past 12 months have been characterised by a unique combination of business interruption challenges few could have predicted, the crash course we’ve all gone through in understanding and responding to changing regulations, systems and communications has been a salutary experience to some extent.
There is no doubt that keeping up to date can be a complex and time-consuming business, even for those with staff and resources to deal with legal and compliance matters, but the regulations are here to stay. Now’s the time for us to do everything we can to help enterprises large and small meet these new requirements.
This article is an advertising feature sponsored and contributed by Creative United.