Guidance

Financial sanctions guidance for High Value Dealers & Art Market Participants

Published 14 November 2024

This guidance is produced by the Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, the authority for the implementation of financial sanctions in the UK.

It provides financial sanctions guidance for entities and individuals that operate in the sale or trade of high value goods, especially those trading internationally with regions that may be subject to UK financial sanctions restrictions.

This should be considered supplementary to, and not a replacement for, OFSI’s general guidance document. Further sources of information which may prove helpful are listed at the end of this page.

This guidance does not represent legal advice.

If you are unsure about your obligations in a given case, you should consider seeking independent legal advice.

OFSI is responsible for improving the understanding, implementation and enforcement of financial sanctions in the UK. We publish a list of individuals and organisations subject to financial sanctions as well as general guidance to help you comply. This is available on OFSI’s GOV.UK webpages.

1. What are financial sanctions?

Financial sanctions help the UK meet its foreign policy and national security aims, as well as protecting the integrity of its financial system. Financial sanctions are used to respond to a range of threats, from terrorism and nuclear proliferation to internal repression and human rights abuses. Effective implementation and enforcement of sanctions is an essential tool in these endeavours.

Financial sanctions are organised into geographic and thematic regimes. You should consider your exposure to thematic regimes, even if you are operating in a jurisdiction not subject to a geographic regime.  

For general information on financial sanctions, your obligations, and licensing, OFSI provides general guidance.

In addition to the general guidance and this high value dealer guidance, OFSI provides a range of sectoral and geographic guidance.

The territorial extent of UK sanctions regulations includes the entirety of the UK, and it applies to conduct by UK persons – both nationals and corporate bodies - outside of the UK.

The names of designated persons (DP) are not included in the regulations, but instead appear on the consolidated list. This enables immediate publication following a decision to make or amend a designation, limiting the opportunity for asset flight.

2. The UK High Value Goods and Art Market sectors

The UK is a major international hub for the trade of high value goods, including art, antiques, luxury cars, precious metals and gemstones, and for investment in wines and whiskies to name a few. 

In 2023 global art sales were USD $65 billion and the UK had the third largest share at USD $11.05 billion accounting for 17% of the world market.  

The UK plays a significant role in the global auction market, ranking third in the world in 2023 with a market share of 12%. Three of the world’s leading auction houses have been based in London since the 18th century.

More than 36,000 prestigious cars from producers like Aston Martin, Ferrari, Rolls Royce, Jaguar Land Rover, Lamborghini, Maserati and Bugatti were registered at UK addresses in 2022. ¹

In addition to fine art, antiques and luxury cars, other tangible assets such as investments in wines and spirits promise high returns over a medium to long term. High value goods have a substantial impact on the insurance market with the UK being a major global hub in this space. 

As defined by the UN Security Council, luxury goods are considered to be superior to comparable substitutes in terms of design, quality, durability or performance. Luxury goods are often associated with certain brands whose names are preferred by those consumers with strong purchasing power. Luxury goods are sometimes considered to play a role of status symbols.

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2.1 High value dealers

From 14 May 2025, the list of ‘relevant firms’ subject to financial sanctions reporting requirements will be expanded to include high value dealers. More detail on these reporting requirements can be found in section 5.  

Extending reporting obligations to this sector will facilitate OFSI’s aim of encouraging better sanctions compliance, as well as improving OFSI’s understanding of how financial sanctions are being implemented in the impacted sector, raising impacted businesses’ awareness of their sanctions obligations, and assisting OFSI in identifying potential circumvention gaps and financial sanctions breaches. 

A ‘high value dealer’ is defined in sanctions regulations as a firm or sole trader that by way of business trades in goods (including an auctioneer dealing in goods), when the trader makes or receives, in respect of any transaction, a payment or payments in cash of at least 10,000 euros in total, whether the transaction is executed in a single operation or in several operations which appear to be linked. 

These reporting obligations already apply to persons who are engaged in the business of making, supplying, selling (including selling by auction) or exchanging articles made from gold, silver, platinum, or palladium, or precious stones or pearls.

2.2 Art market participants (AMP)

Similarly, from 14 May 2025, art market participants will be added to the list of ‘relevant firms’ subject to financial sanctions reporting requirements.   

An art market participant is defined in sanctions regulations as a firm or sole practitioner who is registered or required to register with HMRC as an art market participant under the Money Laundering Regulations (pursuant to regulations 56(5) and (6) of the Money Laundering Regulations). 

An art market participant’s financial sanctions reporting obligations will apply in relation to ‘information or another matter’ that comes to it “in the course of carrying on its business” which means either when it:   

• trades in, or acts as an intermediary in, the buying or selling of works of art, where the transaction value (or the value of a series of linked transactions) is 10,000 Euros or more; or 

• stores works of art where the value of the works of art so stored for a person, amount to 10,000 Euros or more  

The art market participant definition for financial sanctions purposes does not cover a firm or sole practitioner in relation to the sale or storage of a work of art which is created by, or is attributable to, a member of the firm or the sole practitioner.

3. Common evasion practices

A variety of techniques are used within the this sector to circumvent and evade UK financial sanctions. Understanding these common evasion practices and having proportionate due diligence in place is crucial for building a robust compliance programme. The following chapter provides some examples of common evasion practices you could consider. This list is not exhaustive.

3.1 Movement of assets

The movement of assets, including the sale of high value assets that were previously associated with a designated person, by family members or otherwise on their behalf, where funds are then disbursed offshore through secrecy jurisdictions, is an indicator suspected of being used to evade sanctions.

3.2 Regular payments from an unclear source

It may be indicative of sanctions evasion if there is a lack of clarity on the source of the payment or funds; a concealment of the ultimate beneficial owner of the goods; if transactions are being made through use of offshore accounts; or there is a change in payment arrangements.

3.3 Risks for high value dealers

The following is a non-exhaustive list of factors to be aware of, as part of sanctions due diligence (explained in section 4 below): 

• the ability for individuals and entities to conduct business discreetly, valuing anonymity and confidentiality, means those seeking to negate the effects of sanctions have increased options to do so 

• intermediaries and shell companies are often used to source, buy, or sell high value goods. This is also the case for any associated payments. Such anonymity and obfuscation has been used to conceal the involvement of a designated person in such a transaction 

• the relatively unregulated nature of the international markets for some high value goods  

• the relative ease with which goods in these markets can often be moved, transported, and concealed. 

• it is commonplace for goods to move between jurisdictions, making such movements less noteworthy when being done for the purposes of sanctions evasion - precious metals and stones in particular are very durable and effectively untraceable 

• the subjectivity of the value of luxury goods, including the ability to easily manipulate price to conceal true value 

• wines and spirits from specific geographic regions and vintages, and associated real estate such as distilleries, wineries and vineyards, are attractive investment options for those subject to financial restrictions 

• cultural objects, or ‘cultural property’ from areas where terrorist groups are active, can be used to finance their operations

3.4 Digital assets

Digital assets are items you can buy, sell, hold or trade online, which cannot typically be physically seen or touched.

Digital assets take a number of different forms, with the two most common being cryptocurrencies and non-fungible tokens (NFTs).

Cryptocurrencies form a global market worth in excess of USD $1 trillion. They are themselves online currencies that are traded as traditional fiat currency.

NFTs can represent digital artworks and other digital content, such as sports memorabilia or contracts. Each NFT is unique and holds its own individual value, which is where it differs to most forms of cryptocurrency. The tokens used in cryptocurrencies hold an equal value to each other. Cryptocurrencies and NFTs may be used by DPs in an effort to circumvent restrictions applied through financial sanctions. This is made more possible because digital assets can be exchanged or traded for traditional fiat currency.

Those using, trading in and dealing with cryptocurrencies or NFTs are also subject to these regulations and must apply due diligence with individuals and entities they are dealing with.

4. Due diligence

High value and luxury goods including works of art are susceptible to being used to launder the proceeds of criminal activities as well as evading sanctions. The onus is on you to ensure that you have put in place sufficient measures to ensure you do not breach financial sanctions More information about the anti money laundering guidance can be found here.

Enhanced due diligence checks on your customers and payment chains may be needed to ensure compliance with the UK’s financial sanctions regime. You should assess your exposure to risk and put appropriate measures in place to manage these risks. 

Due diligence should be enhanced by assessing all aspects of proposed business activity to identify if any partners, contractors, third parties or financial institutions appear on the OFSI consolidated list of financial sanctions targets. This should be considered by traders, shop owners, insurers, transporters, storage facility companies amongst many others. 

Access to subscription-based resources that allow for checks on ownership structures of companies may be of benefit. However, this information may also be readily available online and can be accessed freely, which helps carry out a variety of checks to provide initial indicators of compliance behaviour. These types of checks should form part of a strong compliance programme. 

OFSI does not mandate specific measures to be taken, but you may use the following good practice recommendations to guide your compliance efforts. 

If you are conducting activity in, or around, high-risk countries or territories you should have a strong understanding of the sanctions regulations in place, including the relevant obligations. 

You should always seek independent legal advice where necessary and operate a risk-based approach, conducting enhanced due diligence where appropriate.

4.1 Strong compliance programme

We recommend that you implement a strong sanctions compliance programme as appropriate and proportionate to the risk you face. You should also provide training and resources to your personnel. As part of your programme, you may consider:  

• communicating compliance expectations with counterparties, partners, subsidiaries, and affiliates in line with local regulations

• developing, implementing, and adhering to written, standardised operational compliance policies, procedures, standards of conduct, and safeguards

• implementing compliance programmes, which should specify that engagement in sanctionable conduct may result in immediate termination of business or employment, or alternatively, confirm the adoption of controls to mitigate associated risks

• protecting employees who disclose illicit behaviour from retaliation and establish a confidential mechanism for reporting suspected, actual illicit or sanctionable activity

• ensuring that your sanctions compliance programme is routinely audited by qualified third parties to ensure both continuous improvement and effectiveness of your measures and controls

Routinely checking the UK Sanctions List, and the OFSI Consolidated List should form part of your checks. This should be at the point of starting a new business relationship with a client, and at any new point in any transaction with them. This is because the Lists change regularly and while a client may not be designated at the start of a business relationship, they could be added to the List and therefore subject to financial sanctions, at any time during the course of a transaction.

As well as checking your client directly, you should also establish through these checks, any applicable ownership and control structures within businesses you deal with, as they may also be subject to sanctions even though not specifically designated themselves. Please see chapter 10 of this guidance for more information.

5. Reporting obligations

Reporting obligations apply to relevant firms (as defined in the UK regulations under the Sanctions and Anti-Money Laundering Act (“UK regulations”) and referred to below), who are required to inform OFSI as soon as practicable if they know or have reasonable cause to suspect a person (i) is a designated person or (ii) has committed breaches under the UK regulations. A relevant firm is only subject to this reporting obligation where the information or other matter on which the knowledge or reasonable cause for suspicion is based came to it in the course of carrying on their business. 

When reporting to OFSI you must include: 

• the information or other matter on which the knowledge or suspicion is based 

• any information you hold about the person or designated person by which they can be identified 

If you know or have reasonable cause to suspect that a person is a designated person and that person is a customer of your relevant firm, you must also state the nature and amount or quantity of any funds or economic resources held by you for that customer. 

Examples of the kind of information that is required and how to report this information to OFSI can be found in section 5 of OFSI’s General Guidance. 

If you are unsure of your reporting obligations, you should seek independent legal advice.

5.1 List of relevant firms

Relevant Firms are: 

• a person that has permission under Part 4A of the Financial Services and Markets Act 2000 (FSMA 2000) (Permission to carry on regulated activities) 

• an undertaking that by way of business operates a currency exchange office, transmits money (or any representations of monetary value) by any means, or cashes cheques which are made payable to customers 

• a firm or sole practitioner that is a statutory auditor or local auditor 

• a firm or sole practitioner that provides by way of business accountancy services, legal or notarial services, advice about tax affairs or certain trust or company services 

• a firm or sole practitioner that carries out, or whose employees carry out, estate agency work 22 UK financial sanctions: general guidance (August 2022) 

• the holder of a casino operating licence 

• a person engaged in the business of making, supplying, selling (including selling by auction) or exchanging articles made from gold, silver, platinum, palladium or precious stones or pearls 

• a crypto asset exchange provider 

• a custodian wallet provider 

• a high value dealer [from 14 May 2025]

• an art market participant [from 14 May 2025] 

• an insolvency practitioner [from 14 May 2025] 

• a firm or sole practitioner that carries out, or whose employees carry out, letting agency work [from 14 May 2025] 

The definition of “relevant firm” can be found in the ‘Information and records’ part of the regulations for each sanctions regime.

5.2 Additional guidance on reporting obligations for high value dealers, dealers of precious metals and stones, and art market participants

The reporting requirements only apply to relevant firms where the information or other matter on which the knowledge or cause for suspicion is based came to it in the course of carrying on its business. 

In relation to a ‘high value dealer’ this means in the course of carrying on the activity mentioned in the definition of high value dealer (see section 2.1 above). 

In relation to “a person engaged in the business of making, supplying, selling (including selling by auction) or exchanging (i) articles made from gold, silver, platinum or palladium, or (ii) precious stones or pearls’’, this means in the course of carrying on an activity mentioned in that description.  

In relation to an ‘art market participant’, this means: 

• in the course of trading, or acting as an intermediary in the sale or purchase of, works of art when the value of the transaction, or a series of linked transactions, amounts to 10,000 euros or more; or  

• in the course of storing works of art where the value of the works of art so stored for a person amounts to 10,000 euros or more. 

Storing works of art may include activity such as: 

• offering discrete storage services to DPs including storing works of art preceding or post a sale 

• transferring items on behalf of DPs to third party storage facilities

5.3 Russia regulations

If you are a DP under the Russia regulations and a “United Kingdom person” within the meaning of section 21 of the Sanctions Act, you are required to disclose the nature and value of any funds or economic resources you own, hold or control in any jurisdiction, and the location of those funds or economic resources, regardless of where in the world they are located.  

If you are a DP who is not a United Kingdom person, you are required to report the value, nature and location of any funds and economic resources that you own, hold or control in the UK.

Further information on this reporting obligation can be found in the Russia Sanctions Guidance. If you are unsure of your reporting obligations, you should seek independent legal advice.

If you find out that a person or organisation you are dealing with is subject to financial sanctions as detailed in the regulations, you must immediately:

1. stop dealing with them

1. freeze any assets you are holding for them

1. inform OFSI as soon as practicable

6. Licensing

A licence from OFSI is written permission to permit an activity that would otherwise be prohibited, imposed under the relevant sanctions regulations and in certain circumstances. Licences do not compel all parties of the licence to undertake the stated activity and neither does it transfer risk to OFSI.

For more details on OFSI’s specific licences and to find out how to apply for a licence, please visit our licensing page on GOV.UK.

7. Compliance and penalties

Any person carrying out or partaking in business that involves the purchase, movement, trade, transport or storage of high value goods including works of art should be aware of the risks posed and the consequences for failure to ensure compliance with the sanctions regime.

Breaches of financial sanctions are a serious criminal offence.

Relevant firms are required to notify OFSI, within HM Treasury, if they hold frozen assets or if they know or have reasonable cause to suspect in the course of carrying on their business that a person is a designated person or has breached a prohibition or failed to comply with an obligation. Failure to comply with reporting obligations is an offence. A person who commits the offence is liable on summary conviction to imprisonment for a term not exceeding 6 months, or a fine, or both.

OFSI is responsible for the monitoring of compliance with financial sanctions applicable in the UK and for assessing suspected breaches of the regulations. OFSI has powers under the Policing and Crime Act 2017 to impose monetary penalties of up to £1 million or 50% of the total value of the breach, whichever is higher, for breaches of financial sanctions.

OFSI can also refer cases to law enforcement agencies for investigation and potential prosecution. Breaches of financial sanctions are considered a serious criminal offence and are punishable by:

• up to 7 years imprisonment on conviction on indictment (applying to all of the UK)

• up to 12 months imprisonment in England and Wales on summary conviction (or, in relation to offences committed before section 154(1) of the Criminal Justice Act 2003 comes into force, 6 months)

• up to 12 months imprisonment in Scotland

• up to 6 months imprisonment in Northern Ireland

Please refer to the relevant legislation or further information.

Case Study

An investigation that concluded in 2023 found that around £1m of artwork belonging to a US sanctioned terrorist financier was being stored in warehouses in the UK.

The artworks represented items being held on commission for sale by the sanctioned financier, as well as items he had bought from a UK gallery. These purchases used an overseas company linked to the sanctioned individual.

The terrorist financier was later sanctioned in the UK and added to the Consolidated List.

The artwork was seized and later forfeited by law enforcement agencies under the Proceeds of Crime Act.

As part of this investigation a man was arrested on suspicion of terrorist financing on 18 April 2023.

Observations

The case highlights the risks of art storage facilities as an example of a means to conceal high value assets by designated persons. It also shows the extent of enforcement action that can be taken against those who not only evade sanctions, but facilitate in that evasion.

Financial sanctions are part of a wider sanctions framework targeting malign activity. OFSI works with other parts of government, supervisory bodies and regulators to consider all reported non-compliance, and shares relevant information accordingly in line with the relevant sanctions and data protection legislation.

OFSI’s approach to compliance and enforcement is detailed in Chapter 7 of its general guidance document and more specifically set out in its enforcement and monetary penalty guidance, both of which can be found on our guidance page on GOV.UK.

8. Ownership and control

If a person or entity is designated, their name will be recorded on OFSI’s consolidated list of Financial Sanctions Targets in the UK (asset freezes and investment ban targets). An asset freeze and/or some financial services restrictions will apply to entities or individuals which are owned, held or controlled, directly or indirectly, by a designated person.

Those entities or individuals may not be designated in their own right, so their names may not appear on the consolidated list. However, those entities and individuals are also subject to financial sanctions.

As set out in the UK financial sanctions general guidance, an entity is owned or controlled directly or indirectly by another person in any of the following circumstances:

• the person holds (directly or indirectly) more than 50% of the shares or voting rights in an entity

• the person has the right (directly or indirectly) to appoint or remove a majority of the board of directors of the entity, or

• it is reasonable to expect that the person would be able to ensure the affairs of the entity are conducted in accordance with the person’s wishes

If any of the above criteria are met, and the person who owns or controls the entity is also a designated person, then financial sanctions will also apply to that entity in its entirety (meaning these assets should also be frozen).

For more information on ownership and control, please see general guidance chapter 4.

9. Trade Sanctions

OFSI works closely with the Department for Business and Trade (DBT). OFSI deals with financial sanctions and DBT with trade sanctions. These different types of sanctions have differing processes for instance, in licensing activity. It is therefore important to consider the relevance of both financial and trade sanctions to your business.

OFSI is responsible for:

• The implementation and administration of financial sanctions in effect in the UK

• Licensing exemptions to financial sanctions

• Promoting awareness of, and compliance with, financial sanctions

• Imposing monetary penalties for financial sanctions breaches

DBT, through the Office of Trade Sanctions Implementation (OTSI), is responsible for the civil enforcement concerning the:

• provision or procurement of sanctioned trade services

• movement, making available or acquisition of sanctioned goods outside the UK

• transferring, making available or acquisition of sanctioned technology outside the UK

• providing ancillary services to the movement, making available or acquisition of sanctioned goods or technology outside the UK

HMRC is responsible for enforcement of trade sanctions as they relate to the movement of goods and technology over the UK border, including services that are ancillary to that import or export. HMRC is also responsible for the criminal enforcement of all trade sanctions measures.

DBT is responsible for licensing trade sanctions and has produced guidance where you can check which trade licence you need. This will guide you to the application page for each type.

If you are carrying out activity that falls under the remit of more than one trade licence type, you will need to submit separate licence applications for each one.

You may need a licence from OFSI as well as DBT

For further information on export controls and trade sanctions relating to exporting goods and providing ancillary services, contact ECJU.

For further information on trade sanctions relating to the provision of standalone services, including professional and business services, contact OTSI.

10. Further Support

HMRC’s guidance on Anti-Money Laundering Supervision for High Value Dealers

For further support with UK financial sanctions, you can:

• Consult OFSI’s general, geographic and sectoral guidance

• Access OFSI’s webinars

• Subscribe to E-Alerts from OFSI

• Email OFSI