Scrutiny of the art market
The recent conviction of art dealer Oghenochuko Ojiri for offences under the Terrorism Act 2000 ("Terrorism Act) has highlighted the significant risks faced by the art market professionals.
Agents, galleries and dealers – and all those in the business of art - operate within a regulatory framework that imposes significant consequences for non-compliance alongside the reputational damage that usually attends such breaches.
Ojiri, founder of Ramp Gallery, now known as Ojiri Gallery, pleaded guilty to eight offences under the Terrorism Act of failing to make disclosures during the course of business in a regulated sector. This concerned Ojiri's sale artwork that was valued at around £140,000 to a suspected Hezbollah financier sanctioned by the United States in 2019 and the United Kingdom in 2023. Following his guilty pleas, he was sentenced to two and a half years' imprisonment.
While this prosecution is the first of its kind, it serves as a reminder to individuals and businesses operating in the art market that their activities will be scrutinised for anti-money laundering and counter-terrorism compliance. The Crown Prosecution Service, Office of Financial Sanctions Implementation and HMRC will pursue criminal charges against those who do not comply with their obligations, and the recent sentencing should jolt those who may have become complacent or lax complacency or laxity around their reporting obligations. 
Current legislation
In the UK, the Terrorism Act forms part of the UK's anti-money laundering regime alongside other legislation such as the Money Laundering Regulations 2017 (as amended most recently by the 5th Anti-Money Laundering Directive, see below) and the Proceeds of Crime Act 2002. Individuals and businesses whose activities fall within the scope of the legislation must be acutely aware of their duties.
The 5th Anti-Money Laundering Directive
The 5th Anti-Money Laundering Directive came into effect on 10 January 2020 and brought "art market participants" (AMP) and relevant transactions and/or linked transactions within the scope of the AML regulation.
An AMP is defined as 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. For further details and insight about whether this applies to you or your business, please refer to our articles, The "Art Market Participant" and the 5th Anti-Money Laundering Legislation (AML) Directive and "Art Market Participants": what you need to know about changes to Anti-Money Laundering Regulations which were published contemporaneously with the implementation of the Directive.
Yet, despite the Directive now being in place for over five years, a number of AMPs still remain unaware: 1) that they fall into this category; and 2) of the requirement for them to register and to continue with ongoing obligations. Such obligations include remembering to renew the registration annually, pay the related fees, and keep the registration up to date throughout the year if, for example, there is a change of director or address. Those who do not know or fail to comply with these requirements may face criminal and/or civil penalties, as well as reputational damage and disciplinary action; these consequences should not be shrugged off or minimised.
Reporting requirements and sanctions
Therefore, to adhere to the rules and regulations, buyers, sellers, dealers, auction houses, galleries and museums are expected to be vigilant in their efforts to prevent facilitating proceeds of crime and money laundering, including proactive reporting obligations borne from reasonable suspicion. Wilful ignorance or failure to act will not provide a defence if a relevant individual or organisation's activities are scrutinised and it is found that the threshold for suspicion has been met.
It is imperative that individuals and businesses are alive to their obligations through regular training and due diligence checks to ensure that the warning signs are recognised, and the appropriate steps are taken.
The Government has also published guidance on how to implement a strong compliance programme to prevent breaches and consequent sanctions which can be found here. However, the onus remains on each individual and business to take the necessary precautions to avoid fines and/or imprisonment.
Information on reporting requirements and financial sanctions can be found in our article, UK Art Trade to be subject to Sanctions Reporting Regime, published in December last year.
If you have any queries on how to navigate anti-money laundering legislation or require further advice, please contact a member of the Art Law Team, who will be able to assist.