Recently HMRC sent along an update to our community members regarding proliferation financing. We understand that letters like this can feel intimidating - especially when they ask you to update policies, procedures and risk assessments without providing context.
We’re here to keep it simple.
In this article we will help explain what this means to you as an art market participant and how to factor these updates into your daily operations/overarching policies.
First off, what is proliferation finance?
For a full definition you can refer here to The Financial Action Task Force (FATF)’s explanation. But in plain terms, proliferation financing is when funds are used to support nuclear, chemical or biological weapons and their delivery when in conflict with national laws/international obligations.
I’m Not Funding Nuclear Weapons - What Does This Mean for Me?
It is very unlikely that as a gallerist or advisor you are supporting chemical warfare. However, this update to the Anti-Money Laundering regulations means that from September 1st 2022, your business must have policies, controls and procedures in place to manage proliferation financing risks.
This means you will need to be able to demonstrate that your due diligence process checks if the person, company, country or government you're dealing with is sanctioned, or if the country you are dealing with is itself high-risk. If you are already conducting due diligence properly you have already met this requirement.
In addition, HMRC will expect to see a dedicated section in your risk assessment outlining that you understand the risks of proliferation financing and the policies and procedures you have in place to mitigate this risk.
Arcarta users will find a guide in the University with further information - you can access the University through your dashboard.
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