The richest sport in the world is now coming under the microscope of Anti Money Laundering regulations

By Christina Agapiou Advocate at Law | Anti-Money Laundry (AML) & Regulatory Compliance consultant

New European Anti-Money Laundering Rules: Implications for Football Clubs and Agents

New European Anti-Money Laundering Rules: Implications for Football Clubs and Agents

In anticipation of the upcoming UEFA European Football Championship in June 2024, the football world is poised for significant excitement, but it is also under the microscope for regulatory developments that extend beyond the pitch. On April 18, 2024, the European Parliament formally adopted a comprehensive package aimed at combating money laundering and terrorist financing—the so-called AML Package. This legislative shift introduces significant updates to the Sixth Anti-Money Laundering Directive (6AMLD) and a new Anti-Money Laundering Regulation (AML Regulation), collectively establishing stricter requirements for entities involved in high-risk sectors. Notably, this extended scope now includes professional football clubs and football agents. This inclusion marks a pivotal change in how the football industry will be regulated, aligning it with international efforts to curtail financial crimes.

The Scope of the New Regulations

The newly adopted AML Package extends its obligations to a range of entities previously not subject to such stringent requirements. As of April 2024, professional football clubs and football agents will now fall under the category of obliged entities in accordance with the AML Regulation. This categorization compels football clubs and agents to implement and adhere to a series of measures designed to combat money laundering (ML) and the financing of terrorism (TF).

The primary rationale for this expansion stems from the high risk of financial abuse within the football sector. The global nature of football, coupled with the significant financial transactions involved—such as player transfers, sponsorship deals, and intricate ownership structures—has made the sport vulnerable to money laundering and illicit financing.

Obligations for Football Clubs and Agents

Under the AML Package, professional football clubs and football agents will be required to:

  • Implement Internal Policies: Both football clubs and agents will be required to develop, maintain, and enforce anti-money laundering (AML) policies, procedures, and controls, designed to identify, mitigate, and manage the ML/TF risks inherent in their operations.
  • Conduct Risk Assessments: Clubs and agents must perform a comprehensive risk assessment of their operations, identifying potential vulnerabilities related to money laundering and terrorist financing. This risk-based approach must be revisited regularly to account for any changes in operational dynamics.
  • Customer Due Diligence (CDD): Football clubs and agents will need to comply with CDD measures as outlined in the AML Regulation, which include verifying and monitoring the identity of clients (whether players, intermediaries, or sponsors) and understanding the nature of their transactions. This includes, but is not limited to, identifying the beneficial ownership of entities involved in financial transactions.
  • Ongoing Monitoring: It will be necessary to monitor transactions on an ongoing basis to identify suspicious activities. Should any suspicious transactions arise, clubs and agents must report these findings to the relevant Financial Intelligence Units (FIUs) promptly.
  • Training and Compliance: The regulations mandate that clubs and agents provide regular training on AML/CTF compliance for employees involved in relevant operations. Further, individuals tasked with overseeing compliance must demonstrate the requisite skills, knowledge, and integrity.

Specific Provisions for Professional Football Clubs

The definition of professional football clubs under the AML Regulation is broad, encompassing any legal entity that owns or manages a football club engaged in a national football league in a Member State of the EU, where players and staff are remunerated for their services.

The new regulations primarily apply to clubs in connection with financial transactions involving investors, sponsors, agents, and intermediaries. Notably, however, clubs in lower divisions may be eligible for exemptions if they meet certain criteria—specifically, those with an annual turnover of less than €5 million over the past two years and who demonstrate a low-risk profile in relation to money laundering.

Key Dates and Compliance Timeline

The AML Package, once formally adopted by the Council and published in the EU’s Official Journal, will have its enforcement period set to commence five years after its formal enactment, a departure from the typical three-year timeline applicable to other obliged entities under EU law. This extended timeframe allows entities, particularly in the football sector, to prepare for the comprehensive compliance obligations.

Next Steps: Formal Adoption and Enforcement

As of April 18, 2024, the European Parliament’s adoption of the AML Package provides a legal framework for future enforcement within the EU, with formal publication expected in the coming months. Following publication in the EU’s Official Journal, these rules will be enforced with an effective timeline of 2029 for full compliance by football clubs and agents.

The inclusion of football clubs and agents within the AML framework will undoubtedly drive a new era of financial transparency within the sport, ensuring that financial transactions are subject to robust oversight and that the risk of illicit financial flows is significantly reduced.