AML legislation at auction houses
The Anti-Money Laundering (AML) legislation is designed to prevent money laundering and the financing of terrorism. For auction houses and buyers of art and antiques through an auction, this means that there are certain obligations to identify, report, and prevent suspicious activities. Below is an explanation of what this legislation entails for auction houses and buyers.
What does AML legislation mean for auction houses?
c. Reporting Obligations:
If an auction house suspects that money laundering or other illegal activities are taking place, they are required to report this to the authorities (e.g., the Financial Intelligence Unit, or FIU, in the Netherlands). This could happen if, for instance, large sums of money are paid in cash, which could be seen as suspicious.
d. Staff Training:
Auction houses are required to train their staff to recognize suspicious activities and how to handle potential cases of money laundering.
e. Payment Restrictions:
Many countries have rules regarding how payments for art and antiques at auctions can be made. For instance, there may be limits on cash payments (such as no payments over €10,000 in cash in the Netherlands). Payments above this threshold generally need to be made via bank transfers or other traceable methods.
What does AML legislation mean for buyers of art and antiques?
As a buyer at an auction, you also have certain obligations and responsibilities due to AML regulations:
a. Identity Verification:
Before you can place a bid, the auction house may ask you to verify your identity. This often involves providing a copy of your ID and proof of your address. This is especially common for auctions involving high-value items or where there is a potential risk for illegal activities.
b. Source of Funds Inquiry:
In some cases, the auction house may ask you about the source of the funds you’re using to pay for an artwork or antique. This is particularly true for large transactions or if there is anything suspicious about your transaction history.
c. No Large Cash Payments:
Due to strict regulations around payments over a certain amount, you will likely be required to pay via bank transfers or other traceable methods for most auctions. In most cases, large sums of cash cannot be used to purchase an artwork or antique.
d. Reporting of Suspicious Activity:
If the auction house suspects that there is something suspicious about a transaction, they may ask questions or even halt the transaction and report it to the relevant authorities.
AML – in summary
AML legislation aims to regulate the use of art and antiques as potential channels for money laundering. Auction houses are required to identify their customers, monitor transactions for suspicious activity, and report concerns to the authorities when necessary. Buyers, in turn, must be prepared to verify their identity and the source of their funds, and are generally prohibited from making large cash payments.
Need more info about AML?
info@flandersauctions.be
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Monday – Thursday: 09h00-17h00 (CET)
Friday on appointment