In recent years, passion investing in physical assets, such as art, watches, jewellery and other collectibles, has become clearly more popular. At the same time, AML and KYC obligations for banks and other professional parties have become considerably stricter.

Banks and other parties, such as gold dealers, jewellers, galleries, art dealers and auction houses, therefore increasingly ask questions about the source of funds. These obligations are legally embedded, meaning that they cannot simply cooperate in transactions without sufficient substantiation. Physical assets are often regarded as a high-risk area in this respect.

Unlike listed securities, which remain continuously within the banking system, physical assets often remain outside the view of financial institutions for many years. They are acquired with available funds, sometimes in cash, or are passed down within families for generations. Only at the time of sale and the transfer of the proceeds to an account do these assets re-enter the view of banks and other parties.

This often makes it challenging in practice to compile a conclusive file, even where the origin of the funds is perfectly legal. As a result, transactions may be delayed, additional questions may be asked, or funds may in certain cases even be temporarily blocked.

Our expertise and approach

Arx Aurum has extensive experience in preparing and handling AML and KYC files relating to physical assets.

We assist clients in building legally substantiated files that allow proceeds to be transferred to a bank account in a correct and defensible manner. Where necessary, we also assist in identifying suitable counterparties for the sale of physical assets.

Our experience extends to both sides of the spectrum:

• assistance to private individuals wishing to sell physical assets and facing questions about the source of funds

• support for financial institutions and professional parties, such as galleries, art dealers and auction houses, in complying with their AML and KYC obligations

Integrated support

We do not limit ourselves to the AML/KYC aspect. Where desired, we combine this analysis with a tax assessment of the proceeds, so that clients have a complete picture of the consequences of a transaction.

We also assist clients with:

• the analysis and drafting of purchase and sale agreements

• the structuring of transactions, with attention to efficiency and legal certainty

• carrying out transactions with the greatest possible discretion, where required