UK Financial Expands to High Value Dealers and Art Market Participants

In May 2025, the UK’s Office of Financial Sanctions Implementation (OFSI) updated its sector-specific guidance to include High Value Dealers (HVDs) and Art Market Participants (AMPs) as “relevant firms” under UK sanctions regulations. These sectors have historically operated with limited regulatory oversight, despite their exposure to sanctions risks via high-value transactions, cash payments, and asset mobility. The updated framework introduces mandatory reporting obligations for HVDs and AMPs, reinforcing the UK’s commitment to robust financial sanctions enforcement.

Key Judgements

• Newly Relevant Firms: From 14 May 2025, HVDs and AMPs are now subject to mandatory sanctions reporting obligations, joining financial institutions, auditors, and legal service providers.
• Exposure in the Luxury Sector: The UK’s $11B share of global art sales and tens of thousands of luxury vehicle registrations annually make the sector an attractive channel for evading sanctions.
• Use of Professional Enablers: Designated Persons (DPs) increasingly rely on galleries, auction houses, storage services, and wealth managers to obscure ownership and sustain asset access.
• Underreporting of Suspected Breaches: OFSI notes that most suspected breaches in the art and high-value sector are reported by third parties (e.g., banks, law firms), indicating low awareness and reporting among HVDs and AMPs themselves.
• Digital Asset Risk: Cryptoassets and NFTs are explicitly identified as growing risks, especially where used as substitutes for fiat in luxury trades.

Threat Overview

The guidance outlines several key vulnerabilities specific to the high-value goods and art sectors, many of which mirror patterns previously observed in financial institutions:

• Asset Movement to Secrecy Jurisdictions: Designated persons may sell, transfer, or relocate artworks and luxury items via third parties, with proceeds routed through offshore accounts or opaque trusts.
• Use of Intermediaries & Shell Structures: DPs often rely on third-party firms or opaque corporate structures to hide their involvement in transactions.
• Subjective Asset Valuation: Manipulating the stated value of goods is common in this sector, enabling DPs to misrepresent transaction sizes and evade reporting thresholds.
• Durability & Portability: Items like precious metals, rare wines, or gemstones can be moved discreetly across borders, making physical enforcement difficult.
• Storage and Commission Sales Risks: Artworks stored on behalf of sanctioned individuals, even if not directly owned, represent a sanctions exposure if facilities fail to conduct proper checks.
• Use of Crypto and NFTs: Digital assets, including unique NFTs linked to digital art or collectibles, can be traded internationally and anonymously, providing an additional sanctions evasion pathway.

Strengthening Compliance

To mitigate risks and meet legal obligations, OFSI advises that HVDs and AMPs implement a structured and proportionate compliance framework, with particular focus on due diligence, monitoring, and reporting:

1. Due Diligence Requirements
   • Screen all clients, intermediaries, and beneficial owners against OFSI’s Consolidated List before and during the course of business.
   • Trace ownership and control structures, even when entities are not explicitly designated.
   • Conduct enhanced due diligence for transactions exceeding €10,000 in cash or involving clients from high-risk jurisdictions.
2. Reporting Obligations
   • Notify OFSI “as soon as practicable” if there is knowledge or reasonable suspicion that a client is a DP or has breached UK sanctions.
   • Reports must include identifying information, the nature and quantity of funds or assets held, and the source of suspicion.
   • Apply the same obligation for storage transactions involving artworks valued at €10,000+.
3. Compliance Programme Expectations

• Develop internal sanctions policies, risk assessments, and staff training protocols.
• Conduct regular audits and re-screening to account for list changes or transaction developments.
• Monitor and restrict use of alternative payment channels, including crypto and NFT transfers.
• Terminate business relationships upon identification of sanctionable conduct.

Polixis' Role in Supporting Sanctions Compliance

As sanctions enforcement expands beyond traditional finance, Polixis offers tailored solutions to help firms in the luxury and art sectors meet these new obligations. 

Our ARDIS and CheckMate platforms support:

• Real-time screening of counterparties and beneficial owners
• UBO structure mapping and offshore risk analysis
• Batch monitoring of clients
• Case management tools for timely breach detection and reporting

We continue to monitor enforcement trends and regulatory shifts to ensure that our clients remain compliant.