In March 2025, the Office of Financial Sanctions Implementation (OFSI) introduced new reporting obligations for High Value Dealers (HVDs) and Art Market Participants (AMPs), set to take effect on 14 May 2025. These measures are designed to strengthen the UK’s financial sanctions regime and ensure businesses operating in high-value sectors comply with the necessary due diligence and reporting requirements.

The changes emphasize the increased risk of financial sanctions evasion within the luxury goods and art sectors, particularly through opaque transactions, asset movements, and digital assets. The new framework aims to enhance compliance efforts, reduce vulnerabilities, and close gaps that may be exploited by designated persons (DPs) and their enablers.

Key Changes

Expanded Reporting Obligations

From 14 May 2025, the following entities will be legally required to report financial sanctions breaches:

• High Value Dealers (HVDs) handling cash payments over €10,000 in a single or linked transaction.
• Art Market Participants (AMPs) engaged in buying, selling, or storing artwork valued over €10,000.
• Insolvency practitioners and letting agents involved in transactions with designated persons.

These obligations do not replace existing compliance requirements under anti-money laundering regulations (MLRs)but add a legal duty to report when firms suspect a breach.

High-Risk Sanctions Evasion Practices

Financial crime risks remain high in these sectors due to the luxury and investment appeal of goods involved. OFSI highlights common evasion methods, including:

• Asset Movement – Sale of high-value assets previously associated with a DP through intermediaries.
• Opaque Payment Sources – Use of shell companies, trusts, and offshore accounts to obscure ownership.
• Luxury Goods as Investment Vehicles – High-value assets like wines, whisky, and precious metals being used as alternative investment options by sanctioned individuals.
• Digital Assets & NFTs – Cryptocurrencies and digital assets enabling cross-border transactions with reduced traceability.
• Manipulation of Prices – Manipulation of prices - the subjectivity of the value of luxury goods can hide their true values

Compliance and Due Diligence Requirements

To comply with the new obligations, businesses must enhance their due diligence and monitoring practices, including:

• Screening all clients and transactions against the OFSI Consolidated List.
• Verifying beneficial ownership structures to prevent indirect DP control.
• Conducting enhanced due diligence for transactions involving high-risk jurisdictions or unverified payment sources.
• Regularly auditing compliance programs and training employees on financial sanctions risks.
• Establishing protection mechanisms to encourage internal reporting of suspicious activity.

Enforcement and Penalties

Non-compliance with the new financial sanctions reporting obligations carries severe legal consequences, including:

• Up to 7 years imprisonment for serious violations.
• Fines up to £1 million or 50% of the transaction value, whichever is higher.
• Regulatory sanctions, including restrictions on business operations.

How Polixis Can Help

Staying compliant with UK financial sanctions is more challenging than ever, especially with evolving regulations and increasing enforcement. Polixis provides cutting-edge AI-driven solutions for financial crime risk management, due diligence, and compliance automation, ensuring you stay ahead of regulatory risks.

Our tools help businesses in the luxury, art, and financial sectors identify sanctions risks, screen transactions, and stay ahead of regulatory changes.

Book a demo today and discover how Polixis can strengthen your sanctions compliance strategy here