It was foreseeable that sooner or later football clubs would also be affected by the regulations relating to the prevention of money laundering. After all, this sector is characterised by complex structures and high cash flows. Two characteristics that make it particularly susceptible to money laundering offences. The connection between money laundering and football has also been addressed in various investigative reports, but not only: international authorities such as the European Banking Authority (EBA) and the Financial Action Task Force (FATF) have also investigated and emphasised the potential exploitation of the football sector for money laundering.
With the new Regulation (EU) 2024/1624 of the European Parliament and of the Council on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (EU AML Regulation), various players in the football sector are now also included in the group of obliged entities. They must therefore fulfil certain compliance obligations in order to minimise their risk of being used for money laundering and terrorist financing. The regulation was published in the Official Journal on 19 June and will only take effect for obliged entities in the football sector from mid-2029. Until then, however, football clubs must prepare themselves in order to meet the standards.
Which players from the football sector will be engaged?
The regulation determines which players will be subject to the obligations under money laundering law. In the football sector, the following will be subject to the Regulation in future: (1) professional football clubs, (2) holding companies that own professional football clubs and (3) football intermediaries. In addition, there is a restriction of the obligation for certain activities for professional football clubs (see below). This is intended in particular to address areas in which there are high risks (e.g. through the involvement of offshore or letterbox companies or through complex or difficult-to-trace transactions).
This two-part article will look at the individual obligated parties. The first part will deal with the professional football clubs.
Professional football clubs
Firstly, Art. 3 para. 3 lit. o) EU AML Regulation includes "professional football clubs" in the group of obliged entities under money laundering law. Professional football clubs are defined in Art. 2 para. 1 no. 52 EU AML Regulation as: "any legal person that is a football club or the owner or manager of a football club that has been granted a licence, participates in the national football league or leagues of a Member State in the Union and whose players and staff are employed under contract and remunerated in return for their services".
This includes both men's and women's football. The legal entity that participates in match operations with a team is the addressee of the obligations and not the individual footballer. If a club outsources its own match operations to a corporation, the corporation would be the obligated "professional football club" according to the autonomous interpretation of EU law. In order to qualify as a professional football club under the EU AML Regulation, the following conditions must also be met cumulatively in accordance with Art. 2 para. 1 no. 52 EU AML Regulation:
- The professional football club must have been granted a licence (e.g. a licence to participate in the Bundesliga or Bundesliga 2 by the DFL);
- The professional football club must participate in one or more national football leagues of an EU Member State (this is understood to mean football leagues that are played throughout the territory of a Member State); and
- The players and staff must be contractually employed by the professional football club and remunerated by it; this is intended to exclude amateur clubs.
Activities that trigger obligations under money laundering law
Therefore, if an entity fulfils the requirements described above and is therefore a professional football club under the EU AML Regulation, it only has to fulfil the anti-money laundering obligations of the EU AML Regulation for certain business activities and therefore only has to comply with the customer due diligence obligations in certain situations, for example. According to Art. 3 para. 3 lit. o) EU AML Regulation, the obligations will apply in future in relation to the following four transactions:
- Transactions with an investor. This includes transactions with the partners or shareholders of the football club, i.e. with its investors.
- Transactions with sponsors (e.g. for advertising or jerseys).
- Transactions with football agents or other intermediaries. This also includes transactions for football coaches or the club's board of directors.
- Transactions for the purpose of transferring a football player. This refers to all payments associated with the transfer of a player, such as payments to the player's agent or to training clubs
Member states can regulate exceptions
If certain conditions are met, Art. 5 of the EU AML Regulation allows Member States to partially or fully exempt professional football clubs from the scope of the Regulation. The conditions depend on the league in which the club plays: for example, professional football clubs in the highest national football league (e.g. the men's Bundesliga) can only be exempted if they have generated an annual turnover of less than EUR 5 million in each of the previous two calendar years. This requirement does not apply to clubs that play in a league below the highest national football league.
Irrespective of league affiliation, however, it is also necessary in both cases that the activities of the professional football club pose a low risk of money laundering and terrorist financing, which justifies the exception. Requests for exemptions must be justified by the member states as part of a detailed risk assessment. They must be submitted in writing to the European Commission, which must confirm or reject the exemption within two months. Only then can it be formally decided.
You can read more about this in the article by Haffke/Wegner/Primbs: Professional football clubs and football intermediaries as obliged entities under the new EU Money Laundering Regulation, SpuRt 4/2024, p. 256 ff.
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