The UK art market has recently come under intense scrutiny as nearly 50 art businesses, including renowned galleries like White Cube, Opera, and Carl Kostyál, were fined for failing to comply with anti-money laundering (AML) regulations. HM Revenue & Customs (HMRC) issued penalties between January and September 2024, with fines averaging over £3,000 and peaking at £13,000. The primary issue stemmed from late registration under AML rules, which had a deadline in June 2021. 

While some businesses voluntarily disclosed their late registration, they still faced significant penalties. An anonymous gallerist revealed that their £10,000 fine had created widespread fear among dealers and left them feeling “punished for being truthful”. Many affected businesses chose not to appeal, citing challenges in navigating HMRC’s processes and a desire to move forward. 

The complexity of AML regulations 

Art compliance consultant Rakhi Talwar criticised the formula used by HMRC to calculate fines, arguing that it disproportionately penalises businesses based on gross profits from transactions that may not qualify as art dealings or fall below the €10,000 threshold. This highlights the broader debate within the industry about the practicality and fairness of AML regulations. While HMRC asserts that these measures protect businesses from financial crime risks, many industry leaders view them as overly broad and costly. 

Implications for the Art market 

This wave of penalties underscores the importance of compliance in an increasingly regulated art market. Businesses must ensure they meet all registration deadlines and implement robust AML policies to avoid financial penalties and reputational damage. The art market’s unique characteristics—such as high-value transactions and international dealings—make it particularly susceptible to regulatory scrutiny. 

Moving forward 

For art businesses, this situation serves as a wake-up call to prioritise compliance efforts. Engaging with experts in AML regulations and adopting transparent practices can mitigate risks. As the art world continues to evolve, balancing creativity with compliance will be essential for sustainable growth.