Sanctions Risk for Art Market Participants: Practical Lessons from Hauser & Wirth

Hauser & Wirth facilitated the sale of an artwork in 2021, before Regulation 46B of the Russia (Sanctions) (EU Exit) Regulations 2019 (Russia Regulations) came into force on 14 April 2022. That restriction prohibits the export of luxury goods (including fine art) to or for use in Russia or making the same available to a person “connected with Russia”. Final payment was made in July 2022 and the artwork was released for shipment in August 2022. It was destined for Armenia but was stopped and seized by UK Border Force in September 2022 before it was able to leave the UK.

The Prosecution maintained that the artwork had been “made available” to a person connected with Russia once the Defendants released it into the shipping process / logistics chain, following payment. The Court agreed that this was at least capable of amounting to “make available”. In other words, the relevant act did not necessarily depend on the artwork being physically delivered to the buyer or even leaving the UK.

Many businesses and AMPs dealing in the art market may instinctively focus on the destination of goods or whether physical delivery of the art has taken place. Judge Baumgartner’s ruling confirms that this is too narrow of an approach and that sanctions risks can arise at the earliest stages of the shipping process, including when an artwork is handed over to agents, freight providers or others acting on a buyer’s instructions. 

For AMPs, this means controls should not be concentrated solely at contract or export stage of selling the artwork. They need to run through the life of the transaction, including payment, shipping, storage and handover, to ensure that sanctions risk is properly managed through all stages of the process. 

Regulation 21(2) of the Russia Regulations establishes that a person is considered “connected with” Russia if the person is: (a) an individual who is, or an association or combination of individuals who are, ordinarily resident in Russia, or (b) an individual who is, or an association or combination of individuals who are, located in Russia. 

The Court found that there was insufficient evidence that the buyer was, at all relevant times, an “ordinary resident” in Russia and therefore a person “connected with Russia” for the purposes of being subject to the Russia sanctions regime. The Prosecution argued that Mr Popov, the buyer of the relevant artwork, was an “ordinary resident” in Russia by virtue of his Russian citizenship (which he has had from 2016 to date, with a failed attempt at renunciation), ownership of Russian businesses and continued ownership and use of Russian property. However, the Court considered the broader factual picture of Mr Popov, including evidence that he had rented out his property in Moscow, had obtained residential agreements in Armenia, Italy and Bosnia and Herzegovina, had sought Bosnian citizenship and had sought to renounce his Russian citizenship. Judge Baumgartner therefore held that the buyer did not satisfy either of the two limbs of the test set out above. 

The extent of what English Courts might consider a sufficient “connection” with Russia for sanctions designation purposes has also been considered Dalston Projects Ltd, where the Supreme Court considered if there was a basis to designate individuals because of their own connections to existing designated persons and President Putin. Contrastingly, the recent ruling in Hauser & Wirth established that business interests, connections and historic Russian addresses are not the only factors considered when establishing if there is a Russian nexus – Judge Baumgartner took a holistic approach to establishing whether such a Russian nexus existed and, more importantly, still remained. 

The judgment in this case demonstrates the importance for AMPs and other businesses operating in the art and antiquities market to have proportionate sanctions controls in place, which take account of the full range of sanctions and export risks that they face in today’s complex geopolitical environment.  

AMPs should be cautious about assuming that a transaction would be considered lower risk simply because the artwork is being shipped to a third country, such as Armenia, rather than directly to a sanctioned country. Routing the transport of artwork through another jurisdiction will not remove the risk if the prohibition is based on the classification of the buyer being considered “connected to Russia” or otherwise designated by the UK.

Secondly, firms should not assume that the risk of being caught under the UK sanctions regimes only crystallises on delivery of the ‘luxury good’. The release of an artwork into a transportation chain, or into the control of an agent acting for a client, may in itself give rise to a sanctions risk. Intermediary parties may come under scrutiny – the case of Hauser & Wirth reinforces that specialist art logistic companies and other third parties may be implicated on the basis that they have facilitated a transfer process that breaches UK sanctions. The activities of storage providers, service providers and intermediaries can all give rise to sanctions risk and therefore requires implementation of sanctions procedures that are tailored to the part they play in the process.

Especially for high-net-worth individuals who operate in the art market, questions of residence, location, and company / organisation control are particularly relevant, when dealing with individuals who may have multiple homes, citizenships and companies in different international jurisdictions. Considering Mr Popov and his multiple properties as an example, it is important to consider whether owning and residing in multiple properties alleviates the “ordinarily resident in Russia” test, or whether maintaining a property in the sanctioned jurisdiction, even if only intermittently used, creates sanctions exposure.

It is important for AMPs to note that the judgment in the case of Hauser & Wirth was not critical of HMRC bringing the prosecution. The evidence presented showed substantial continuing links between Mr Popov and Russia, but it was concluded that these links failed to meet the strict statutory test set out in the Russia Regulations. Therefore, whilst the judgment is a set-back for UK sanctions enforcement agencies, it is unlikely to deter them from continuing to bring prosecutions against AMPs alleged to have breached the UK sanctions or AML regime. More broadly, the case of Hauser & Wirth is a reminder that AMPs are now firmly in the crosshairs of financial crime and sanctions enforcement authorities:

AMPs should maintain up-to-date AML and sanctions policies, procedures and training, supported by competent senior oversight and clear accountability. 

Sanctions policies for AMPs operating in the UK should also be tailored to the specificity of the UK’s sanctions regime, rather than simply being lifted from policies adopted in other jurisdictions e.g. the US or EU.

AMP owners, directors and managers need to have a board-level strategy to address compliance risk and ensure that this is properly implemented at an operational level, recognising the particular features of the art and antiquities market in the UK means that an “off-the-shelf” compliance approach may not be practical or effective for the business.

[1] HM Treasury, ‘Anti-Money Laundering and Counter-Terrorist Financing – Supervision Report 2024-25 (December 2025): https://assets.publishing.service.gov.uk/media/693308125b5198836f304150/24-25_Annual_Report_.pdf