KNOW YOUR CLIENT
or receives, in respect of any transaction, a payment or payments in cash of at least €10,000 in total, whether the transaction is executed in a single operation or in several operations which appear to be linked”[1] also fall within the scope. The €10,000 threshold seems relatively low in the context of a multi- million-euro superyacht, but participants in the superyacht sector including shipyards, brokers and suppliers must be aware of their potential obligations under the 2017 Regulations and it is advisable to have a policy in place whereby you do not accept high value cash. In January 2020, the 2019 Regulations came into force and extended the scope of the 2017 Regulations to include art traders, specifically those who deal in sales, purchase and storage of works of art with a value, for a single transaction or a series of linked transactions of €10,000 or more. Owners should therefore expect to be asked for KYC documentation from their art dealer if they are purchasing, selling or storing artwork where the value of the transaction is more than €10,000.
than 25% of the company and the full names of the board of directors and senior persons responsible for the company’s operations. The 2017 Regulations also require the identification and verification of the beneficial ownership structure and source of funds. In others a new company set up to buy a €200 million superyacht needs to be legitimately funded. It is not enough to be a high profile public personality “known” to be rich. They have to prove how this particular wealth was acquired and put into the company that will buy the superyacht. For those carrying out the KYC checks they need to show they have done this. Failure to run the checks, even on a legitimate individual is a breach of the law. This can be a point of contention between clients and their advisers, with the advisers needing full transparency to comply with their AML obligations and the clients wishing to maintain a level of anonymity through their ownership structures. Lawyers have a legal duty of confidentiality to keep the affairs of current and former clients confidential, unless disclosure is permitted by law or the client consents, which should give clients some comfort. There is a misconception that AML legislation only applies to limited sectors including those mentioned above. Under the 2017 Regulations, ‘high value dealers’ which are defined as “a firm or sole trader who by way of business trades in goods…, when the trader makes
In the UK, anti-money laundering (AML) laws are derived from the EU AML directive, which was first adopted in the early 1990s and has been supplemented and widened in scope over the years, most recently in 2018. The primary AML legislation in the UK is The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the 2017 Regulations). The 2017 Regulations have been supplemented more recently in 2019 (the 2019 Regulations) and again in 2020 as a result of Brexit. The 2017 Regulations apply to companies in the UK, but given that the regulations are derived from the EU AML directive, similar laws will apply in all EU countries.
The UK also has other important relevant legislation including (i) the Terrorism Act 2000 (TA 2000) and (ii) the Proceeds of Crime Act 2002 (POCA 2002).
2017 Regulations to, amongst other things, carry out KYC checks on their clients and customers. The checks must be thorough and will include, for example, identifying and verifying the identity of individuals, the name, registration number and registered address of corporate clients, the law to which the client is subject, the client’s constitution, anyone who directly or indirectly owns more
In the superyacht sector, brokers, law firms and financial institutions are increasingly involved whether that is during the negotiation or financing of a new-build project, the sale of a second-hand yacht, the drafting of a design agreement or the provision of escrow account services. These sectors, and others such as accountants and tax advisers have duties under the
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