Update: The EU keeps the ball rolling in its battle against money laundering – next on the agenda: professional football

Professional football is not just an entertaining happening for millions of fans around the world; it is also a big money game. During the 2021/22 football season, the top 10 clubs based in the EU (i.e. without the English Premier League) had an aggregated turnover of more than EUR 4.5 billion. Over the same period, the accumulated turnover of the EU’s top leagues in France, Germany, Italy, and Spain amounted to a staggering EUR 10.9 billion. Given these figures, it is no surprise that the EU seeks to extend its anti-money laundering (AML) and countering terrorism financing (CTF) framework to include ‘professional football clubs’ and ‘football agents’. The corresponding Anti-Money Laundering Regulation (AMLR) was adopted by the EU Parliament on 24 April 2024 and is currently awaiting a formal decision by the Council of the EU (the Council).

In this blogpost, we take a deep dive into some of the money laundering risks associated with professional football and lay out the AML requirements that are on the horizon for professional football in the EU.

How money is laundered in football

Football is one of the most commercialised and globalised sports worldwide. Its unparalleled success roots in an enormous number of close to 130.000 professional players across the globe and even (much) higher numbers in viewers. 1.5 billion people worldwide tuned in for the final match of the 2022 FIFA World Cup. These sheer numbers fuel large investments and attract huge sums of money into a sport that so far does not have any binding AML-regulation at the European level (as do sports in general). Moreover, the often cross-border nature of money transfers in professional football is said to facilitate illegal money laundering activity especially due to the lack of integrated national and international control mechanisms. 

Against this background, a 2019 report from the European Commission found that “professional football’s complex organisation and lack of transparency have created fertile ground for the use of illegal resources. Questionable sums of money with no apparent or explicable financial return or gain are being invested in the sport.” It points to football as an “obvious candidate” for money laundering. Apart from the economic aspects, the European Commission also found that the social prestige and celebrity culture that come with association to clubs and players would also attract criminal investments. 

While it is naturally hard to estimate the true amounts of money laundered through sports every year, the United Nations Office on Drugs and Crime gave an estimate of an annual range up to USD 140 billion laundered through sports betting alone. With respect to football in particular, legislators and regulators seem to focus on the significant sums paid for the purchase or sales of football clubs, player transfers and ownership, consulting services as well as sponsorships and advertisements, as well as illegal practices such as “match-fixing”. 

The current state of the EU AML legislation

The European AML framework currently is based on a Directive (Anti-Money Laundering Directive 5, AMLD 5), which was transposed by the Member States into national law. Different national implementations and administrative practices have resulted in a heterogenous AML landscape. Almost three years ago, the European Commission published an action plan on the prevention of money laundering consisting of an EU single rulebook via a new AMLR and the creation of a new AML/CFT supervisory authority at EU level (AMLA).

Professional football has so far not been expressly addressed by the European AML framework. While money laundering is a criminal offence in all Member States, the AMLD 5 did not extend its scope to the football industry (or sports in general). There have, however, been initiatives in Member States to impose stricter AML requirements on EU football clubs (see for example the already existing AML framework in Belgium or recent press reports from the German Federal State of Bremen).

Although professional football was not covered in the Commission’s initial legislative proposals, it was taken up in the course of the legislative process: Amendments proposing to extend the scope of AML legislation to professional football clubs, sports agents and football associations were first introduced in the draft joint report of the European Parliament’s Committee on Economic and Monetary Affairs (ECON) and the Committee on Civil Liberties, Justice and Home Affairs (LIBE), published on 15 March 2022. While the specific scope was revised, the proposed coverage of professional football was generally maintained during the subsequent inter-institutional negotiations, which were successfully concluded in February 2024. Following the adoption of the final compromise text of the AMLR by the EU Parliament on 24 April 2024, the AMLR now awaits formal adoption by the Council before being published in the Official Journal of the EU.

Who is affected by the new requirements?

European AML requirements are only binding for so-called ‘obliged entities’. While the first European AML Directive only defined credit and financial institutions as ‘obliged entities’, the list of ‘obliged entities’ has grown significantly over the past years. The AMLR will follow this tradition and expand in Article 3 the scope of AML requirements to further natural and legal persons. The final compromise text of the AMLR proposes to extend the scope to ‘professional football clubs’ and ‘football agents’. In contrast to the ECON-LIBE committee report, football associations are no longer classified as obliged entities in the final compromise text of the AMLR.

1. Professional football clubs

A ‘professional football club’ is defined as any legal person that is, owns or manages a football club that has been granted a licence and participates in the national football leagues in a Member State and whose players and staff are contractually engaged and are remunerated in exchange for their services. Amateur football is, therefore, clearly outside the scope of the European AML framework.

Professional football clubs are classified as ‘obliged entities’ in respect of 

• transactions with an investor, 
• transactions with a sponsor, 
• transactions with football agents or other intermediaries and
• transactions for the purpose of transferring a football player. 

Importantly, football clubs are no longer considered to be ‘obliged entities’ in respect of transactions other than those mentioned, such as transactions with fans. This should be seen in the context of the AMLR’s risk-based approach and recognition that key risk areas are transactions with investors and sponsors, including advertisers, and player transfers (recital 24).

Member States may exempt, in full or in part, the following professional football clubs from the requirements of the AMLR based on a proven low risk due to the nature and scale of their activities:

• clubs that participate in the highest division of the national football league and that have a total annual turnover of less than EUR 5 000 000
• clubs that participate in a division lower than the highest division of the national football league.

In Germany, for example, all clubs in the first division of the Bundesliga would not qualify for such an exemption and would therefore be subject to the AMLR. Similarly, in Spain, at least all clubs in the first division of LaLiga would be covered, taking into account their respective revenues through TV rights alone. Football clubs based in the United Kingdom or other third countries would not be subject to the new AML requirements, even where they carry out business activities in the EU (such as player transfers or away games).

2. Football agents

In addition to football clubs, the AMLR also covers ‘football agents’. A football agent is defined as a natural or legal person who, for a fee, provides intermediary services and represents football players or professional football clubs in negotiations with a view to concluding a contract for a football player or represents professional football clubs in negotiations with a view to concluding an agreement for the transfer of a football player. While not entirely clear, the scope of this definition seems to be limited to professional football. However, a de-minimis-threshold is not envisaged by the AMLR. As such, any intermediary activity may suffice for the classification as a ‘football agent’.

What are the new requirements for professional football?

The European AML framework is built on three pillars:

• Internal risk management measures: Identifying and assessing the risks associated with money laundering and terrorist financing, inter alia by conducting a specific AML risk assessment, implementing reporting lines, responsibility structures and providing funds for an adequately staffed AML compliance department.
• Customer due diligence (CDD): The process of verifying the identity of customers and assessing the risk of doing business with them. The primary goal of CDD is to ensure that obliged entities know who their customers are, understand the nature of their business activities, and can identify any potential risks associated with their transactions. This includes verifying the customer’s identity using reliable sources such as government-issued identification documents, as well as gathering information about their business activities, sources of funds, and beneficiaries, and conducting ongoing monitoring to ensure that this information remains up to date. 
• Suspicious activity reporting: Notification of suspicious activities to the competent authority. This includes transactions that may be related to money laundering or terrorist financing, as well as those that are inconsistent with a customer’s known or declared business activities.

Once in force, these AML requirements would also apply to professional football clubs and football agents. The new requirements would supplement the already existing voluntary commitments at the levels of UEFA and FIFA, such as UEFA’s commitment to eradicate match-fixing (and the money-laundering risks that come with it) as well as FIFA’s Clearing House that assesses compliance with AML regulations in the context of payments, for example regarding player transfers (Art. 15.2 b CHR).

Potential impact

Applying these new AML requirements on professional football could potentially have a massive impact and require a significant effort on the part of the newly captured ‘obliged entities’.

In particular, during the implementation phase, EU football clubs and football agents will be required to conduct an AML risk assessment, draft AML compliance frameworks and establish an AML compliance function. Internal risk management measures will also need to be regularly reviewed and updated.

A greater challenge may prove to be the CDD measures envisaged by the AMLR, which may need to be applied to all sources of funding for professional football clubs, which can typically be broken down into

• TV and advertising revenue,
• merchandising and matchday-sales, 
• Transfers of football players, and
• investments from private equity sponsors, individuals and even states.

To which of these counterparties would CDD measurers need to be applied?

CDD measures need to be applied to customers when (i) establishing business relationships or (ii) when carrying out occasional transactions in excess of EUR 10,000 (Article 19(1) AMLR). The AMLR clarifies that the EUR 10,000 threshold applies whether the transaction is carried out in a single operation or through linked transactions, thus covering the practice of splitting a large sum of money into many smaller portions, known as smurfing. 

While the scope of the general CDD requirement is broad, as noted above, professional football clubs are only considered ‘obliged entities’ in respect of transactions with an investor, a sponsor, football agents or other intermediaries and transactions for the purpose of transferring a football player.

Therefore, CDD will generally need to be applied as follows:

• Advertising revenue: CDD required in case of the establishment of a business relationship or a one-off transaction in excess of EUR 10,000. 
• TV revenue: CDD arguably not required as TV contracts should not be regarded as ‘sponsorship deals’.
• Merchandising and matchday sales: Generally no CDD required as professional football clubs are not considered ‘obliged entities’ in this context.
• Transfers of football players: Generally CDD required if purchase price exceeds EUR 10,000.
• Investments: CDD arguably required. Although the AMLR does not provide a definition of ‘customer’, the reference to investors in Article 3(3) AMLR suggests that investors must be covered by the CDD.

When will the requirements take effect?

The AMLR is not final yet; it still needs to be formally adopted by the Council. Once finalised and ratified, the AMLR will enter into force on the twentieth day following the day of its publication in the Official Journal of the EU. The AMLR will not apply for three years after its entry into force, and for five years for football agents and professional football clubs, a period which should give the European football industry sufficient time to prepare for the new requirements.