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High-Risk Jurisdictions for Art Market Participants: What they are and why they matter

When conducting customer due diligence (CDD), a key question for Art Market Participants (AMPs) is this: Is this customer, transaction or artwork connected to a high-risk jurisdiction (HRJ)? 

High-risk jurisdictions are countries identified by the Financial Action Task Force (FATF) on a global basis or a national authority as having strategic deficiencies in their legal, regulatory or enforcement frameworks to prevent money laundering, terrorist financing or proliferation financing. Because of those weaknesses, these jurisdictions present elevated risk.

Understanding the lists

The Financial Action Task Force (FATF) issues two core lists:

  • Blacklist – "High-Risk Jurisdictions Subject to a Call for Action"
  • Grey List – "Jurisdictions Under Increased Monitoring"

A country on the blacklist is subject to the highest level of international scrutiny. FATF calls on all jurisdictions to apply enhanced due diligence (EDD) measures when dealing with individuals or entities linked to those countries to protect the international financial system.

Countries on the grey list are being monitored for improvements within a specific timeframe. While they may not pose as high a risk as blacklisted countries, they still require heightened vigilance during risk assessments, especially for regulated businesses.

To read more about the differing HRJ lists (UK, EU) including reference links to government websites, see the latest in our regularly updated blog post: https://artaml.com/high-risk-countries-and-jurisdictions-for-amps-latest-update/ 

Note: When using ArtAML™ to conduct CDD, you can save time by not manually checking lists and instead use the automated HRJ screening throughout the process.

Why HRJs matter for Art Market Participants:

In the 2025 update to its AMP risk assessment, HMRC reinforced that geographic risk is a key pillar of a Business-Wide Risk Assessment (BWRA). Understanding how HRJs affect your AML risk exposure and obligations is essential.

Enhanced due diligence is mandatory in some situations:

If a customer, beneficial owner or transaction is connected to an HRJ, you must apply Enhanced Due Diligence (EDD) under Regulation 33(1)(b) MLRs. As for steps to take, Regulation 37 outlines steps, including for example (but not excluded to) verifying source of funds and source of wealth, and obtaining senior management approval. These requirements apply whether the risk comes from the customer's residency, the location of the artwork or payment/transaction channels.

Greater exposure to illicit flows:

Regulatory and reputational risk:

Even if no law is broken, doing business with customers or intermediaries linked to HRJs can raise regulatory scrutiny, audits and inspections, and reputational damage - especially if provenance or due diligence is later questioned. In the art market, where trust and reputation are central, this can have commercial consequences beyond compliance penalties.

How HRJ/HRTC lists develop over time:

FATF typically updates its lists three times per year: February, June and October. UK HRTCs may change in parallel via statutory instruments. Because of these shifts, AMPs remain responsible for ensuring customers and transactions are screened against current lists. ArtAML™ automates this monitoring so that screenings reflect the latest designations.

Sanctions ≠ High-Risk Jurisdictions:

While there is often overlap (for instance, North Korea, Iran and Syria appear on both lists), sanctions regimes impose legal prohibitions rather than heightened due diligence requirements. Sanctions impose legal prohibitions such as asset freezes and trade bans, whereas HRJs require enhanced due diligence, not blanket prohibitions.

If a jurisdiction is sanctioned, doing business may be prohibited unless licensed. By contrast, HRJ connections may be permissible with appropriate EDD. AMPs must screen against both lists before proceeding.

Indirect risk matters, too:

Even if your customer isn't based in a high-risk country, the transaction may still involve one. Payments routed via an HRJ bank, intermediaries (such as art agents or shipping agents) based in or connected to HRJs or artworks transiting through HRJs should raise red flags and may trigger EDD.

In conclusion: 

High-risk jurisdictions represent a critical component of AML compliance for AMPs. By understanding which jurisdictions are designated as high-risk, why those designations matter and how to apply appropriate due diligence measures, AMPs can better protect their businesses from regulatory, financial and reputational consequences while fulfilling their obligations under the MLRs.

A note on Russia (think: sales, purchases and consignments of art): 

While the Russian Federation and Belarus have not been added to lists of high-risk jurisdictions, the Financial Action Task Force (FATF) warns: 

"The FATF continues to call upon all jurisdictions to remain vigilant of threats to the integrity, safety and security of the international financial system arising from the Russian Federation’s aggression in Ukraine. The FATF reiterates that all jurisdictions should be vigilant to possible emerging risks from the circumvention of measures taken in order to protect the international financial system.”
Source: gov.uk

Further Reading: