Couples buying art: Who is the “customer” for AML purposes?

In short, this will be anyone named on the invoice and payment. In the UK, this can be applied through the lens of Regulation 28 of the Money Laundering Regulations (MLR); however, there is no specific provision addressing couples purchasing together.

Under Regulation 28 of the Money Laundering Regulations 2017 (and typically equivalent legislation in the EU), CDD must be applied to:

• The customer to whom the regulated transaction or service is provided;
• Any beneficial owner; and
• Any person acting on behalf of the customer.
  

HMRC guidance emphasises that firms must understand and evidence the identity of the true customer, how the transaction is structured and whether documentation aligns with financial reality.

The key question, therefore, is not whether two individuals are a couple but rather, who is contracting with the business? Who owns or will own the artwork? Who benefits from the transaction? Is anyone acting on behalf of another person?

There is no automatic rule, and therefore, the analysis is based on substance over form.

If two individuals genuinely purchase and will co-own a work, they are likely both customers.

What to check before conducting CDD

Before conducting CDD when it appears a couple is making a purchase, you should clarify:

• Who is named as the contracting purchaser on the invoice?
• Will payment be coming from an individual or joint account?

Whoever is named on the invoice and/or on bank account is a ‘customer’ in context of CDD and therefore due diligence should be conducted on them. If only one individual is the purchaser in substance, the reasoning for treating the transaction as sole ownership should be recorded.

The source of funds alone does not determine who the “customer” is under Regulation 28.

Regulators will expect internal records to align with the financial reality of the transaction.

When circumstances change

If, during the course of a transaction, a client requests to add or remove a partner’s name, this potentially constitutes a material change in circumstances.

Under Regulation 28(11) and ongoing monitoring obligations, firms must reassess CDD where relevant information changes. If CDD cannot be satisfactorily completed following such a change, the transaction must not proceed (Regulation 31 MLR 2017).

Record-keeping

Under Regulation 40 MLR 2017, records must be retained for at least five years from the completion of the occasional transaction or the end of the business relationship.

For AMPs, the key is not adopting a rigid rule but applying a proportionate, risk-based approach that can withstand regulatory scrutiny.

Get in touch with our team to see how this applies to your individual scenario.