In the context of ordinary auction and private sale transactions with an agent who you know or believe is acting on behalf of a principal whose identity is not disclosed, we must treat the agent as our client for the purposes of customer due diligence and verification of identification. Before you engage in transactions with agents for undisclosed owners, (e.g., dealers who wish to keep the names of their clients confidential from us), you must ensure that we know and trust the agent concerned . . . In addition, you should confirm that the agent knows personally and/or has conducted appropriate due diligence on its clients' identities and activities.[1]
The 2018 AML Policy also notes "certain clients and transactions by their nature pose a higher risk of money laundering/terrorist financing or tax evasion. You must consider the below risk factors in connection with every transaction, and if you believe that your client falls within any of the following categories you must notify the Compliance Department immediately."[2] The "higher risk indicators" include: "clients residing in or with property/funds sourced from high-risk jurisdictions, which are those jurisdictions listed in Annex B."[3] Annex B lists 38 countries, including Russia.[4] Sotheby's added Russia to the list of high-risk jurisdictions in 2018; Russia was not included as a high-risk jurisdiction in its prior AML policy.[5]
The 2018 AML Policy also requires enhanced due diligence for transactions involving a politically exposed person or "PEP."[6] A PEP is defined in the 2018 AML Policy as "an individual that is, or has, at any time in the preceding year been entrusted with a prominent public function by any state, a European Community institution (such as the European Commission) or an international body . . ."[7] The definition of PEP also includes immediate family members and any "person known to be a close associate of the PEP (such as a person who is in a close business relationship with a PEP or a trust or company formed for the benefit of a PEP)."[8] The 2018 AML Policy explains that for PEPS "the risk of money laundering is legally presumed to be higher based on his/her position and the greater likelihood that he/she will be exposed to corruption."[9]
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