Practical guide to due diligence

First step: qualify the risk. The operator assesses the amount, the nature of the work, the geographical origin, the profile of the parties and the method of payment. This diagnosis determines the level of diligence (basic, enhanced or exceptional).

Second step: verify identity. This means making sure of the identity of the seller and the buyer, their capacity to act and, where applicable, the identity of the beneficial owner. Third step: establish provenance, that is, reconstruct as far as possible the chain of owners since the work was created.

Fourth step: check lawfulness. The operator consults the BIOP database, inventories of stolen property, lists of protected property and the legislation of the State of origin. Fifth step: examine payment: origin of funds, consistency with the client's profile, means used.

Sixth step: decide and archive. The operator concludes, refuses or asks for further information, then keeps the complete file. A decision to refuse must be reasoned, and may trigger a report.

A large auction house has a compliance department, computerised tools and networks of experts. An independent dealer does the same on a smaller scale, with a binder or a spreadsheet and a network of colleagues. What matters is that each step is carried out, dated and kept.

OIMAP offers simplified versions for small operators: a single two-page sheet covering the six basic steps is enough for low-value transactions.