On 18 June 2025, the UK Office for Financial Sanctions Implementation (OFSI) released a Threat Assessment (the Assessment) targeting Art Market Participants (AMPs) and High-Value Dealers (HVDs). This follows new rules from 14 May 2025, which make AMPs and HVDs legally responsible for reporting sanctions breaches involving designated persons (DPs).
Why OFSI Focused on AMPs and HVDs?
With the UK accounting for £11 billion of the global art market, OFSI warns that high-value goods (HVG) such as paintings, photography, sculptures, ceramics, furniture, textiles, jewelry, handbags, musical instruments, wines and spirits, and other antiques and cultural property are being used to evade sanctions. OFSI flagged this sector as highly vulnerable to evasion of sanctions due to its reliance on intermediaries freeports or crypto assets. Freeports (also known as free zones) aim to create economic activity, including trade, investment and jobs, near shipping ports or airports. Goods imported into freeports are exempt from certain taxes and tariffs, and can be re-exported overseas without UK duties being paid.
Key Findings
Underreporting: Many firms are not reporting when DPs are involved in the ownership or sale of high-value goods.
Use of intermediaries: DPs often hide behind shell companies, freeports or "professional enablers."
Red flags include:
- Manipulating values to stay under the €10,000 threshold.
- Use of freeports and vaults to store art out of regulatory view.
- Payments using crypto-assets or non-fungible tokens.
- Complex ownership chains across offshore jurisdictions.
- DPs using "golden passports" to mask identities.
Legal Obligations
Under the updated UK sanctions regime, AMPs and HVDs must report if they:
- Know or suspect someone is a DP.
- Identify that they are holding economic resources for a DP.
- Discover activity that may breach sanctions.
Failure to comply can result in civil penalties up to £1 million (or 50% of the transaction value), or criminal prosecution, including unlimited fines or imprisonment.
DPs are also likely to be designated under the US and EU sanctions regimes, increasing the potential for AMPs and HVDs to fall foul of those regimes as well and, subsequently, the possibility for action to be taken by US and EU sanctions authorities.
How to Remain Compliant
To stay compliant, AMPs and HVDs should:
- Update sanctions risk assessments, including digital and physical high-value assets.
- Screen clients, intermediaries and beneficial owners against the OFSI Consolidated List.
- Apply enhanced due diligence for transactions over €10,000.
- Monitor for red flags (as listed above).
- Train staff and implement strong internal reporting systems.
- Keep clear audit trails and document any reports made to OFSI.
Conclusion
This Assessment is a clear warning: Sanctions compliance is no longer optional in the art and luxury sectors. Please contact the authors of this blog post if you wish to discuss any of the issues raised. We work closely with our Fine Art and Cultural Property group to support clients facing the challenge of compliance in this regard.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
