AML Obligations for Auction Houses: Cash Limits, Proxies and Beneficial Owners

25.5.2026 | ARROWS law firm

Auction houses are regulated entities subject to strict AML rules for cash purchases, including transactions carried out through proxy persons. For transactions exceeding EUR 10,000, the auction house must identify the client, determine the source of funds and, where applicable, report a suspicious transaction. It is crucial to address cash limits and identify the beneficial owner even where a representative is involved, in order to avoid legal and reputational risks.

The illustrative image shows an expert addressing the issue of AML obligations of auction houses.

AML and auction houses: Why you are an obliged entity even outside the financial sector
Customer identification and verification in an auction house
AML internal policies system in an auction house
Final summary
FAQ: Auction houses and AML rules

AML and auction houses: Why you are an obliged entity even outside the financial sector

Anti-money laundering and counter-terrorist financing rules (AML/CFT) were not created for the art market, but primarily for banks and financial institutions. They are based on the international standards of the Financial Action Task Force (FATF), which issued 40 recommendations governing, among other things, the obligation to know your customer (KYC), to carry out customer due diligence (CDD), and to identify the beneficial owners of corporations and other structures. States gradually transpose these standards into their legislation, and the European Union reflects them in AML directives and now also in directly applicable regulations.

The Czech Republic implements the FATF recommendations primarily through Act No. 253/2008 Coll., on certain measures against the legalization of proceeds of crime and the financing of terrorism, referred to as the AML Act. This Act precisely defines the range of so-called obliged entities, which no longer includes only banks, but also real estate agencies, tax advisers, providers of services related to crypto-assets, persons trading in high-value goods, and specifically art dealers and auction houses.

The reason is simple: from the perspective of FATF and national authorities, the art market is considered high-risk because it enables rapid transfers of high values, often with an international element and with relatively low transparency.

In practice, this means that if you operate an auction house or trade in works of art, antiques, or collectibles at values that the AML Act considers relevant, you fall under the regime of an obliged entity. In this role, you must comply with a number of obligations—from customer identification, through risk assessment of specific transactions, to reporting suspicious transactions to the Financial Analytical Office (Finanční analytický úřad).

This is therefore not an “add-on” agenda, but a legal framework, non-compliance with which may lead to multi-million fines, damage to the auction house’s reputation, and, in extreme cases, even criminal liability for certain individuals.

When an auction house becomes an obliged entity under the AML Act

The AML Act defines who is an obliged entity both generally and through specific categories, which include art dealers, auction houses, galleries, and antique dealers. In general, AML obligations typically apply to entities that handle third-party funds or participate in cash or virtual-asset transactions of at least EUR 10,000, as well as to intermediaries in the sale of high-value items such as gold, jewellery, or works of art.

If, therefore, an auction house organises an auction of a painting whose starting price and expected final price can reasonably be anticipated at this level or higher, it should prepare for the full AML regime.

At the same time, the Act works with the concepts of a transaction and a business relationship: a transaction is any dealing by an obliged entity with another person aimed at handling that person’s assets or providing a service; a business relationship is then a contractual (and newly also certain statutory) relationship whose purpose is to handle the client’s assets or provide services on a repeated basis.

In a typical scenario, an auction house acts as an intermediary between the seller (consignor) and the buyer (bidder), and from an AML perspective these are two separate clients—i.e., two separate counterparties—towards whom identification and due diligence obligations apply. In practice, this duality is often underestimated, especially where the seller is a long-term client of the auction house and the relationship is perceived as “partner-like”; however, the AML Act provides no such leniency.

It is important to realise that an auction house falls under the AML regime not only for in-person auctions, but also for online auctions, private sales, or brokering sales outside the auction room, if they meet the definition of a transaction or business relationship and the value thresholds.

Modern auction houses that organise hybrid auctions with foreign clients therefore typically combine AML rules from several jurisdictions and must align the requirements of the Czech AML Act with the expectations of foreign banks and supervisory authorities. These cross-border aspects are often a source of practical issues, and underestimating them may lead to payments being blocked on foreign-currency accounts, a bank refusing to process a payment, or inquiries from foreign financial intelligence units.

New European AML regulations and their impact on auction houses

In the area of AML law, significant regulation is currently underway at the level of the European Union, often referred to as the “AML package”. This includes, in particular, the AMLR Regulation, which is intended to directly harmonise the obligations of obliged entities across the EU, and the AMLA Regulation governing the newly emerging European AML supervisory authority, as well as a new AMLD Directive, which will supplement regulation in areas left to the Member States.

These regulations will gradually take effect between 2025 and 2027, and certain elements—such as the inclusion of crypto-asset service providers (CASPs)—have already been reflected in the Czech AML Act.

For auction houses, it is important that the European regulatory framework places increasing emphasis on a risk-based approach, thorough identification of beneficial owners, work with politically exposed persons and sanctions lists, and transparency of complex ownership structures. Although the AML package does not focus exclusively on the art market, it objectively increases the pressure on entities that enable transfers of high values, including auction houses.

For auction house management, it is therefore rational to invest in high-quality internal processes and legal setup even before the new rules begin to be strictly enforced—preventive adjustments are always cheaper than subsequent defence against fines or transaction blocks.

The attorneys of ARROWS, a Prague-based law firm, monitor in this area not only Czech legislation but also the preparation and application of European regulations, including the AMLR and the MiCA Regulation for crypto-assets. For auction house clients, they therefore do not address only formal compliance with the current wording of the Czech AML Act, but also set up processes that will stand up under the future unified European regime—especially for entities with cross-border clientele and accounts held abroad.

Cash payments in an auction house: Limits, prohibitions, and practical pitfalls

When purchasing at an auction house, the term “cash payment” in everyday language often means that the buyer finances the purchase from their own funds without a loan—typically without a mortgage. From a legal perspective, however, it is essential to distinguish the source of funds from the form of payment: a cash payment is one made using banknotes and coins, or other instruments that the law considers cash, whereas a non-cash payment is made by transfer through a bank account or another cashless channel.

In auction practice, it is therefore important not to rely on “colloquial” terminology and to always clarify internally whether this involves the physical handover of cash or a cashless transfer.

Cash payments between entrepreneurs in the Czech Republic are subject to a separate Act No. 254/2004 Coll., on Restrictions on Cash Payments, which sets the maximum amount of a single cash payment and also regulates exceptions and the consequences of breaches. This act binds both payers and recipients, including auction houses, if they accept or provide cash payments above the statutory limit.

A breach of these rules may result in a sanction being imposed both on the person who made the payment and on the person who accepted it, and in the case of legal entities the fines may amount to millions of Czech crowns. Accepting cash above the statutory limit is therefore not a “buyer’s risk”, but a direct risk for the auction house as well.

In addition to the limit on the amount of a cash payment, it is also important that the Act on Restrictions on Cash Payments prohibits circumventing the rules, for example by formally splitting one economically related transaction into several smaller payments or by using multiple persons.

If an auction house accepts several cash payments made by different persons, but in reality these constitute performance by the same buyer for the same item, such conduct may be assessed as circumvention of the law—not only under the Act on Restrictions on Cash Payments, but also from an AML perspective, where such splitting typically meets the characteristics of a suspicious transaction.

Link between cash and AML obligations

The AML Act explicitly treats cash transactions as one of the risk factors, both in terms of when the obligation to identify the client arises and in terms of assessing whether a particular transaction is suspicious. An obliged entity must identify the client no later than when it is clear that the value of the transaction will exceed the statutory limit, and client due diligence (enhanced verification) is then typically required before carrying out a transaction whose value reaches at least EUR 15,000, or in the case of cash transactions above EUR 10,000.

For auction houses, the combination of a high-value artwork and a cash form of payment therefore practically always means that the transaction cannot be carried out without performing client identification and due diligence, without breaching the AML Act.

Special attention must be paid to situations where the client insists on a cash payment while at the same time refusing to provide information on the source of funds, the beneficial owner, or the purpose of the transaction. The AML Act expressly classifies such behaviour among the indicators of a suspicious transaction and imposes on the obliged entity both the obligation to refuse such a transaction and the obligation to report it to the Financial Analytical Office (FAÚ).

The management of an auction house should therefore be aware that an effort to “accommodate a good client” who does not want to disclose their background may lead to far more serious consequences than losing a single deal—including the obligation to explain its procedures to the FAÚ and to defend itself against a proposal to impose a fine.

In cash payments, it is also common practice to use attorney, notarial, or bank escrow, especially for higher-value transactions, which is a standard known, for example, from real estate deals. This practice in itself does not mean that the auction house’s AML obligations fall away—the auction house remains obliged to identify and conduct due diligence on its clients under the AML Act, while the attorney or bank providing the escrow addresses its own AML obligations within its profession.

However, if an auction house sets up a process whereby it directly recommends that clients use escrow with a specific attorney or financial institution, it is advisable to align the AML procedures of both entities so that there are neither duplications nor gaps that could appear as insufficient care in the event of an inspection.

Typical mistakes by auction houses in cash payments

In practice, we see several recurring mistakes, mainly concerning the combination of cash payments and AML obligations. One of them is accepting a cash payment above the statutory limit on the basis that the accounting department will subsequently “split” it into multiple documents, or that part of the payment will be formally attributed to another person, such as a family member of the buyer.

Such a procedure may be assessed as a deliberate circumvention of the Act on Restrictions on Cash Payments, and in addition to sanctions under that act it will also have a very negative impact on the assessment of the auction house’s AML system in the event of an inspection.

Another mistake is when an auction house perceives cash payments as a “VIP service” reserved for its best clients and is willing to relax the requirements for client identification and due diligence for them—for example, by not requiring evidence of the source of funds or authority to act on behalf of another person. However, the AML Act does not recognise any such “VIP client” status; on the contrary, it assumes an increased level of caution for high-net-worth individuals and persons with significant political or public influence.

If an auction house makes an exception to its internal AML procedures for a “good client”, such a case typically becomes the weakest point of the entire system and the one on which supervisory authorities will focus.

A third typical mistake is insufficient documentation of cash transactions, both at the accounting level and at the level of AML records. The AML Act requires the obliged entity to retain the data and documents obtained during client identification and due diligence for ten years from the completion of the transaction, and at the same time emphasises so-called back-traceability, i.e., the ability to demonstrate after some time what exactly was established, what considerations the obliged entity made, and why it concluded that the transaction was not suspicious.

If an auction house records only minimal data and does not create high-quality AML records, it will find it difficult to defend its due care, even if employees at the time of the transaction subjectively sought to take a cautious approach.

Client identification and verification in an auction house

In everyday language, an auction house client is sometimes understood to be only the person who pays the commission or trades regularly, or the person with whom the auction house has a long-term relationship. However, the Czech AML Act uses the term “client” in a more precise sense and links it to the concepts of a transaction and a business relationship—i.e., any person with whom the auction house deals in a way that involves handling that person’s assets or providing services to them in the course of its business.

In a typical auction scenario, there will therefore be at least two clients—the seller (the owner of the auctioned work) and the buyer (the successful bidder)—and AML obligations apply to both.

A more complex situation arises where the auction house deals with a person who claims to be acting for someone else—for example, a professional dealer bids for their client, a family member represents a company, or an attorney acts under a power of attorney. In such cases, for AML purposes the client is not only the person who actually appears before the auction house, but also the person on whose behalf they act, and in relation to legal entities additionally their beneficial owner.

This multi-level identification is more demanding for auction house practice, but unavoidable if they want to meet statutory requirements and at the same time avoid the risk of becoming a tool for concealing the identity of the true buyers.

Basic client identification (KYC)

The Czech AML Act provides that an obliged entity must identify the client no later than at the moment it becomes clear that the value of the transaction will exceed the statutory threshold, and also always where the transaction is suspicious or a business relationship is being established. For auction houses, this moment is typically linked to bidder registration before an auction, taking a work into the auction from the seller, or entering into a long-term cooperation agreement—for example with clients who regularly buy at multiple auctions.

Identification of a natural person usually consists of verifying identity from an identity document (ID card, passport), recording the required identification details, and, where permitted by the Czech AML Act, making a copy of the document.

For legal entities, identification includes verifying the client’s existence, typically via an extract from the Commercial Register or another public register, identifying the person acting on behalf of the legal entity, and then establishing and verifying its beneficial owner. The beneficial owner (UBO) is the person who in fact has decisive influence over the management or ownership of the legal entity, and AML standards as well as the Czech AML Act emphasize that obliged entities should know this person and check, for example, whether they are a politically exposed person or a person on a sanctions list.

In auction house practice, it is therefore not enough to be satisfied that the buyer is a “reputable company” registered in the Commercial Register; it is necessary to go one level deeper.

Modern AML practice also allows the use of remote identification, for example via bank identity, a qualified electronic signature, or a video call, provided the technical and legal conditions are met. For auction houses that serve clients abroad and organize online auctions, using these tools is often essential because the client’s physical presence in the auction room is not realistically possible.

However, setting up remote identification is legally and technically sensitive, and it is recommended to consult experts to ensure the process complies with the requirements of the Czech AML Act as well as the GDPR.

Customer due diligence (CDD) and establishing the source of funds

Client identification is the first step, but it is not sufficient on its own—the Czech AML Act also imposes an obligation to carry out customer due diligence, which is more detailed and aims to determine whether a particular transaction poses an increased risk of money laundering or terrorist financing. Customer due diligence includes, in particular, establishing the purpose and intended nature of the transaction or business relationship, establishing the client’s ownership and management structure, identifying and verifying the beneficial owner, reviewing the sources of funds or other assets involved in the transaction, and ongoing monitoring of the business relationship.

For auction houses, customer due diligence typically applies to transactions with a value of at least EUR 15,000, cash transactions above EUR 10,000, politically exposed persons (PEPs), and clients from jurisdictions considered high-risk. In practice, this may mean that the auction house will require the buyer to evidence the source of funds for the purchase of an exceptionally expensive work—for example by providing proof of income, a bank statement, evidence of the sale of another significant asset, or a loan agreement.

For the seller, the auction house may require documents proving how the work was acquired—for example a previous purchase agreement, confirmation of acquisition by inheritance or gift, or evidence of the family history of the work in question.

Customer due diligence also includes checking whether the client or their beneficial owner is a politically exposed person, whether they are listed on sanctions lists, and whether they appear in adverse media. For PEPs, enhanced due diligence is typically applied, which may include a more detailed examination of the source of wealth, approval of the transaction by senior management, and more continuous monitoring of the business relationship.

It is therefore important for an auction house to have tools and internal procedures in place that enable these details to be obtained and assessed efficiently, while also respecting personal data protection rules.

Documentation and record retention

One of the most frequently underestimated areas is documentation and retention of data on client identification and due diligence. The Czech AML Act requires an obliged entity to retain the data obtained during client identification and due diligence, supporting documents for transactions carried out, and internal records of risk assessments for ten years from the execution of the transaction or from the termination of the business relationship. The aim is to enable the Financial Analytical Office (FAÚ) or another supervisory authority, even after some time has passed, to reconstruct how the obliged entity proceeded, what information it had available, and whether the conclusions reached reflected appropriate professional care.

For auction houses, this means it is not enough to “have available” basic identification details and invoices—it is necessary to systematically maintain an AML file for individual cases or clients, containing copies of documents, register extracts, internal AML forms, records of sanctions-list and PEP-database checks, as well as internal notes explaining why the transaction was assessed as lower or higher risk.

From the perspective of defending the auction house’s approach before the FAÚ, it is often crucial whether the auction house can demonstrate not only that it took certain steps, but also how it reasoned about them—i.e., whether there are written considerations or records by the responsible person.

Insufficient documentation may lead to the conclusion that the auction house’s AML system is merely formal, even if employees subjectively tried to proceed cautiously. This is why the attorneys at ARROWS advokátní kancelář, when reviewing AML systems, emphasize not only the wording of internal policies, but also how specific forms, internal record templates, and IT tools are set up—so that auction house staff are not overwhelmed, while still having a realistic chance to do the right thing and keep a defensible record of it.

Contact our experts:

JUDr. Jakub Dohnal, Ph.D., LL.M.

associate, managing partner

dohnal@arws.cz

Mgr. Marek Hučík

associate, partner

hucik@arws.cz

Purchases via proxy persons, intermediaries and “bidding agents”

In the art market and in auction houses, it is common practice that the actual end buyer does not participate in the auction, but rather an intermediary – a proxy person. This may be a professional art dealer, a gallerist, a collectors’ advisor, an attorney, a family member, or an employee bidding on behalf of their employer.

This model has legitimate economic justification, but from an AML perspective it presents increased risk because it may be misused to conceal the identity of the true buyer or to break the traceability of the source of funds.

The AML Act addresses this situation by requiring the obliged entity to identify not only the person acting on behalf of the client, but also the client themselves and their beneficial owner. If an auction house therefore admits to an auction a person who declares that they are acting “for a client”, it must have available not only that person’s identification data, but also the data of the represented client, sufficient verification of the authority to act on their behalf, and information on the beneficial owner if the client is a legal entity or another structure.

Neglecting this obligation is one of the typical shortcomings sanctioned by supervisory authorities, because it directly undermines transaction transparency.

Proxy persons are viewed as risky also under international FATF standards, which emphasize that obliged entities must prevent complex or non-transparent structures from being used to conceal beneficial owners and to make financial flows harder to trace.

If an auction house adopts a model where all communication runs only with the proxy person and the identity of the true buyer remains unknown or insufficiently verified, it objectively becomes an attractive tool for persons seeking to launder proceeds of crime. This is why proxy persons must be handled systematically, not ad hoc.

Client representation and verification of authority to act

The first step is to verify whether the person acting as a representative is truly authorized to act for the client. In practice, this typically means requesting a power of attorney, a mandate agreement, or another document showing the scope and purpose for which the representative is authorized to “put their thumb on the paddle” for the client.

For attorneys, notaries, or statutory bodies of legal entities, the authority may arise directly from law or a public register; nevertheless, even there it is advisable to verify that the specific person is authorized to act to the given extent (for example, whether there is a conflict of interest, whether the authority to represent has been restricted, etc.).

From an AML perspective, it is not only the formal existence of a power of attorney that matters, but also its content – the auction house should understand whether the proxy person is acting for the account of one specific client or “generally”, whether they have only a one-off mandate for a specific auction or a long-term authorization, and within what financial limits they may act.

This information is important not only for AML records, but also for resolving potential disputes, for example if the client refuses to take delivery of the auctioned work claiming that the representative exceeded the mandate, or asserts that they did not know about the auction at all. The importance of good documentation is particularly evident where such disputes overlap with AML issues – for example if the FAÚ (the Czech Financial Analytical Office) examines who the true buyer was and what the origin of the funds was.

Determining the beneficial owner (UBO) and structure

If a proxy person acts for a legal entity, a trust fund, or another structure, the auction house must, under the AML Act, determine the beneficial owner of that structure and obtain adequate information about them. In the Czech Republic, this usually means working with the Register of Beneficial Owners, the Commercial Register, and other available sources, but a purely formal entry in the Register of Beneficial Owners may not always be sufficient.

AML standards recommend that the obliged entity verify beneficial ownership information from multiple sources, especially if there are indications that the recorded data may not be up to date or that the structure has been set up for a specific purpose.

Particular attention should be paid to cases where the purchase of an expensive work of art is backed by a complex international structure, such as a chain of companies in different jurisdictions, a trust, or a foundation based in a country with limited transparency. In such situations, it is important that the auction house does not give in to pressure to “close the deal quickly”, but assesses whether the structure is transparent to an extent commensurate with the risk of the transaction and, where appropriate, requests additional supporting documents.

If, even after these steps, the identity of the beneficial owner cannot be reliably determined, this may be an indicator of a suspicious transaction that should be considered from the perspective of reporting to the FAÚ.

Screening for PEPs and sanctions lists in purchases via proxy

Proxy persons may also be used to conceal that the true buyer is a politically exposed person (PEP) or a person subject to international sanctions. The AML Act imposes on obliged entities the duty to check whether the client or their beneficial owner is a PEP and to apply special procedures for risk assessment in such cases, including enhanced transaction approval.

At the same time, it is necessary to verify whether the client, their beneficial owner, or the traded item are linked to sanctions regimes implemented by the Czech Republic on the basis of EU law or international obligations.

If a proxy person refuses to disclose the client’s identity or it is apparent that they are trying to conceal that the client is a publicly known figure or a PEP, this is a strong signal of increased risk. In such a situation, the auction house should proceed very cautiously, consider whether continuing the engagement aligns with its risk appetite, and if it is not possible to obtain the necessary information, refuse the transaction and, where appropriate, report it to the FAÚ.

It is advisable for such sensitive cases to also undergo legal assessment, because the decision to terminate or report a transaction may have both legal and significant reputational impacts.

Potential issues	How ARROWS helps (office@arws.cz)
Hidden beneficial owner behind a proxy person: the auction house does not know the actual buyer and the PEP or sanctions risks	Setting up AML processes: the attorneys of ARROWS, a Prague-based law firm, will set procedures for identifying the beneficial owner and verifying information from multiple sources, including screening against PEP and sanctions lists and training employees on how to recognise these situations in practice.
Invalid or unclear power of attorney of the proxy person: a dispute over whether the client is bound by the winning bid	Review of contracts and powers of attorney: ARROWS, a Prague-based law firm, will prepare and review templates for powers of attorney and auction terms and conditions so that they clearly define the scope of the representative’s authority and minimise the risk of invalidity or exceeding the mandate.
Suspicion of a PEP or a sanctioned person, uncertainty about how to proceed	Expert opinion and crisis procedure: the attorneys of ARROWS, a Prague-based law firm, will prepare a prompt legal opinion on the specific case, recommend whether and how to complete the transaction or report it to the FAÚ (the Czech Financial Analytical Office), and, in the event of an inspection or dispute, represent the auction house before the supervisory authorities.
Payment blocked by the bank due to suspected money laundering	Communication with the bank and the FAÚ: ARROWS, a Prague-based law firm, will help prepare supporting documents, an explanation of the transaction and the auction house’s AML procedures, and will represent the auction house in negotiations with the bank and the FAÚ (the Czech Financial Analytical Office) so that, if the transaction is legitimate, it can be successfully completed.

System of internal AML policies in an auction house

The AML Act imposes on each obliged entity the duty to have a system of internal policies in place describing how it will fulfil its obligations in the areas of client identification and due diligence, risk assessment, reporting suspicious transactions, and data retention. In the case of auction houses, we often encounter that this document is adopted from another sector, such as banking, or that it is a generic template that does not reflect the specifics of the art market.

However, supervisory authorities expect internal policies to be genuinely “tailor-made” for the specific business and to correspond to the auction house’s size, nature, and risk profile.

For auction houses, it is necessary to take into account, for example, that they operate both physical and online auctions, that their clientele consists of individuals, legal entities, international collectors and investment funds, that they organise commission sales, private sales and public auctions, and that they trade in items where a higher risk of forgery, theft, or use as a tool for money laundering is expected.

Internal policies must be able to capture these situations, define responsible persons, approval processes, and specific steps that employees must take in particular scenarios.

The absence of a high-quality system of internal policies, or failure to comply with it in practice, is in itself a separate administrative offence for which significant fines may be imposed. During an inspection, supervisory authorities typically do not examine only the text of the internal regulation, but compare it with actual practice – for example, whether staff are trained, whether they understand what they are supposed to do, and whether AML records are in fact kept in accordance with internal procedures.

An auction house therefore needs not only a formally correct document, but above all a functional system that is genuinely usable in day-to-day operations.

Contact person for the FAÚ and management responsibility

The AML Act requires obliged entities to designate a contact person for the FAÚ (the Czech Financial Analytical Office) who will ensure communication with this authority, in particular the filing of suspicious transaction reports and responses to FAÚ queries. This person must be notified to the FAÚ within the statutory deadline and must be available during the obliged entity’s business hours and at the time transactions are carried out, so that emerging suspicious situations can be addressed promptly.

Failure to comply with this obligation or late notification of the contact person may lead to high sanctions, which can reach up to millions of Czech crowns.

At the same time, responsibility for compliance with AML obligations does not rest only with the contact person, but also with the statutory bodies and other senior persons of the auction house. In the event of a system failure, the personal liability of these persons may be addressed, including administrative-offence liability or, in extreme cases, criminal liability, especially if it involved a knowing disregard of obligations or active involvement in the laundering of proceeds of crime.

It is therefore in the interest of the auction house’s management to ensure that the contact person has real powers, access to information and support, rather than being a formal “figurehead” without real influence.

Our attorneys in Prague can assist both with selecting and setting up the role of the contact person and with ongoing support, for example in the form of an external AML adviser or training and methodological guidance. This is particularly advantageous for small and medium-sized auction houses that do not have the capacity for their own robust compliance department, yet must meet the same AML requirements as major players.

Training, practice and a culture of compliance

Even the best internal policies will not work in practice if auction house employees do not know what obligations they have and how to fulfil them in concrete terms. AML regulations therefore place emphasis on training and ongoing education of staff who come into contact with clients, assess transactions, carry out client identification and evaluate transaction risk.

In an auction house, this typically includes both front-line employees (reception, bidder registration, specialists responsible for accepting works into auction) and back-office staff (accounting, legal department, management).

In addition to formal training, a compliance culture is also crucial—i.e., how the auction house’s management communicates the importance of AML rules and how it responds when an employee flags a suspicious transaction. If employees are given the impression that AML is a “brake on business” and that they should not “damage client relationships” with too many questions, this will sooner or later lead to breaches of obligations and real problems.

Conversely, clear management support, internal reporting of suspicions, and protection for employees who raise concerns about a problematic transaction are prerequisites for a functioning AML system.

In practice, ARROWS advokátní kancelář often combines the preparation of internal policies with practical training based on specific case studies from the art market, so that auction house employees can see how AML principles are applied in real-life situations. This makes AML less of an “abstract regulation” and more of a risk-management tool that protects both the auction house and its clients from real consequences—from a bank blocking a transaction to negative media coverage.

Final summary

AML rules for cash purchases and purchases via proxy persons represent a complex but unavoidable framework for auction houses—one they must operate within today if they want to function in the long term and cooperate with banks, clients, and supervisory authorities in the Czech Republic. In practice, it is not only about meeting formal requirements, but about setting up processes that make it possible to identify risky transactions in time, justify them where necessary, and at the same time avoid unnecessarily blocking legitimate business opportunities.

Failure to comply with the rules does not mean only fines—it can lead to blocked payments, termination of the relationship by the bank, reputational damage, and in extreme cases even criminal-law consequences.

For owners and management of auction houses, it is therefore rational to view AML as part of strategic risk management, rather than as a “necessary evil” that can be postponed or “outsourced” only to individual employees without clear management support. Well-designed internal policies, a functional system for client identification and due diligence, a well-thought-out approach to cash payments and purchases via proxy persons, and good documentation are key elements that will fundamentally affect the auction house’s position in the event of an inspection or dispute.

FAQ: Auction houses and AML rules

1. From what amount do AML obligations apply to an auction house?
The AML Act links the emergence of specific obligations primarily to the value of the transaction, which typically starts at EUR 1,000 for identification and EUR 15,000 for customer due diligence, while for cash payments and certain types of transactions, thresholds of EUR 10,000 apply. For art dealers and auction houses, it also matters that they operate in a high-value goods segment where increased risk is generally presumed; for setting specific thresholds in your business, we recommend a consultation with ARROWS advokátní kancelář at office@arws.cz.

2. Do we have to deal with AML in an auction house even if most clients pay cashless?
Yes, AML obligations are not tied only to cash payments—higher-value cashless transactions are just as relevant from an AML perspective and can sometimes be even riskier, especially if foreign accounts or complex structures are involved. Cash is only one risk factor, not the only one; if you are unsure what scope of AML obligations applies to your specific business, contact the attorneys of ARROWS advokátní kancelář via office@arws.cz.

3. What sanctions do we face if we underestimate AML rules?
For breaches of AML obligations, an auction house may face fines in the millions of Czech crowns, possible publication of the misdemeanour decision, reputational harm, and in some cases even personal liability of statutory bodies or designated persons. In addition, a bank may block or refuse transactions, jeopardising client relationships and business continuity; ARROWS advokátní kancelář can help you set up a preventive system and also represent you in any potential sanction proceedings if you contact us at office@arws.cz.

4. What is the practical difference between client identification and customer due diligence in an auction house?

Client identification is the basic verification of identity and recording of the required data, whereas customer due diligence is a broader process that includes determining the purpose of the transaction, the source of funds, the beneficial owner, screening for PEP status and sanctions, and ongoing monitoring of the business relationship. In auction practice, both phases often overlap, and setting their scope correctly is key to efficiency; the attorneys of ARROWS advokátní kancelář can help you with a specific setup if you contact them at office@arws.cz.

5. How should we proceed if we suspect money laundering in a specific purchase?
If you have reasonable grounds to suspect money laundering or terrorist financing, the AML Act imposes an obligation to report the transaction without delay to the Financial Analytical Office (Finanční analytický úřad) and, as a rule, not to carry out the transaction or to suspend its execution until the FAÚ decides otherwise. This is a sensitive step that may affect client relations and the auction house’s reputation, so it is advisable to consult the specific case with ARROWS advokátní kancelář, which can help you prepare the report and set up communication with the FAÚ; you can contact us at office@arws.cz.

Disclaimer: The information contained in this article is for general informational purposes only and serves as a basic guide to the issue as of 2026. Although we strive for maximum accuracy, laws and their interpretation evolve over time. We are ARROWS Law Firm, a member of the Czech Bar Association (our supervisory authority), and for the maximum security of our clients, we are insured for professional liability with a limit of CZK 400,000,000. To verify the current wording of the regulations and their application to your specific situation, it is necessary to contact ARROWS Law Firm directly (office@arws.cz). We are not liable for any damages arising from the independent use of the information in this article without prior individual legal consultation.

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