Economic Crime Supervision Handbook

ECSH63345 - Regulation 14 - High value dealers, casinos, auction platforms and art market participants

Category Heading	Description
The Law	Regulation 14 - High value dealers, casinos, auction platforms and art market participants
What it means	“High value dealer” (HVD) is any business or sole trader who trades in goods and makes or receives cash payments of at least 10,000 euros, including cash deposited directly into a bank account or paid to a third party. It includes an auctioneer dealing in goods when the auctioneer handles the cash payment of 10,000 euros or more. Cash is defined by Regulation 3 as “notes, coins or traveller’s cheques in any currency". Goods are not defined in the regulations so take the ordinary dictionary meaning - things that can be bought and sold and that can be moved. It doesn't include services (as they can't be resold) or property (which can't be transported). There is no GBP equivalent; it would be the conversion from euros at the time of the transaction. For historical transactions you can use the conversion rates for Customs and VAT purposes published on GOV.UK - see link below. "When considering whether transactions “appear to be linked” you should consider the total amount of cash received and the opportunity to dispose of criminal funds. We consider a relevant cash payment to be: - a single cash payment of 10,000 euros (to pay for one invoice or a series of invoices) - several cash payments towards a single purchase totalling 10,000 euros or more (for example payment in instalments or on account) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) "The transaction must be “by way of business”; so would include, for example, an individual buying and selling cars with the intention of making a profit but not a private individual selling a personal vehicle. If you’re not sure if a payment is a relevant cash payment under the Regulations, please speak to the Technical Specialist for HVD. Where an HVD offers other financial services or operates safety deposit boxes an agreement is in place that the FCA will supervise all relevant activity." “Art market participant” (AMP) means a firm or sole practitioner who by way of business trades in, or acts as an intermediary in, the sale or purchase of works of art, and the value of the transaction, or a series of linked transactions, amounts to 10,000 euros or more. See above section for an explanation regarding the GBP equivalent and linked transactions. It also includes the operator of a freeport when it stores works of art in the freeport and the value of the works of art stored for a person, or a series of linked persons, amounts to 10,000 euros or more. A “freeport” is a warehouse or storage facility where goods can be stored without payment of Customs duty or VAT. This is in line with section 100A(1) of the Customs and Excise Management Act 1979 - see link below. A “work of art” follows the same definition as for VAT purposes (i.e. as defined in section 21(6) to (6B) of the Value Added Tax Act 1994 (value of imported goods), is a work of art for the purposes of section 21(5)(a) of that Act). It includes a painting, drawing, collage, decorative plaque or similar picture (but not technical drawings or maps), as well as sculptures, tapestry or other hanging, ceramics and photographs. See link to Section 21 of VAT Act below. The definition also includes casinos who are supervised by the Gambling Commission.
Purpose	This regulation provides the legal definition of a High Value Dealer (HVD) and Art Market Participant (AMP). If the business activities don't meet these definitions then they are not a "relevant person" under the Regulations
Time Line	HVDs were brought into scope by MLR 2003 and were required to register by 1 April 2004. The threshold for cash payments was the equivalent of 15,000 euros until it was lowered to 10,000 euros by MLR2017. AMPs came into scope of the regulation on 10 January 2020 and had until 10 June 2021 to register.
What to establish	For HVD you must establish that the payment was in cash and is the equivalent of 10,000 euros or more at the time the payment was made or received. (This content has been withheld because of exemptions in the Freedom of Information Act 2000) For AMP you must establish that the sale or purchase meets the definition above. Note that the payment can be made by any means,  not only cash. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Best Practice	You must establish what is a normal sale/purchase for the business and ask yourself if relevant transactions are likely. If not, why is the business registered?
AMP	You will need to understand the business's involvement in the sale of art and it's position in the chain in order to establish who is it's customer and ensure due diligence measures are applied to the correct person/entity. If cash payment is received for a relevant work of art, it will also need to be registered as a HVD.
ASP	(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
EAB	N/A. Sales of property are not considered to be "trade in goods" and therefore even if it is a cash purchase it would not fall to be registered as a HVD. A "cash sale" generally means a sale or purchase of a property which doesn't involve a mortgage or financing arrangement, rather than a cash payment using notes/coins.
LAB	N/A. Lettings, even if paid in cash, is a service and is not "trading in goods". (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
MSB	(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
TCSP	(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Further Reading	Registration Guidance - High Value Dealer Registration Guidance - Art Market Participants GOV.UK Guidance for High Value Dealers GOV.UK Guidance for Art Market Participants Tactical and Information Packages (TIPs) Apply for the fit and proper test and HMRC approval FATF - Trade based money laundering indicators National Risk Assessment Dec 2020 National Risk Assessment Oct 2017 HVD specific guidance in the Knowledge Library Exchange rates for Customs and VAT VAT Act 1994 - Section 21: Value of Imported Goods Customs and Excise Management Act 1979 - Section 100A: Designation of Free Zones Customer due diligence - Regulation 27  Customer due diligence measures - Regulation 28 Obligation to apply enhanced customer due diligence - Regulation 33
FAQs	A business banks large volumes of cash on a daily basis, should it be registered as a HVD? Not necessarily; a cash rich business may not be a HVD as it may not accept individual payments above the threshold. (This content has been withheld because of exemptions in the Freedom of Information Act 2000) How do I find an HVD in another country? There is no equivalent of a HVD in another country; most EU countries have criminalised the use of cash and have a limit in place for all sales/purchases (e.g. 1,000 euros in France) - see list of cash limits in Knowledge Library. Cash loaded onto a pre-paid card is not relevant HVD activity and falls under the e-money regulations. Coins which are no longer legal tender, even though may have a high value, are not relevant HVD payments. (This content has been withheld because of exemptions in the Freedom of Information Act 2000) My AMP sells art via an online sales platform, does it still need to carry out CDD? Yes, the online sales platform is either the AMP’s customer or an intermediary in the sale and purchase. If it is subject to the MLRs (or equivalent) and there are no other risk factors present, the AMP may decide to carry out simplified due diligence measures on both the intermediary and the underlying customer (paragraph 5.214 of the BAMF guidance refers). As long as the requirements of regulation 39 are met, the AMP may rely on the sales platform to carry out CDD on the buyer, where required. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)