New European anti-money laundering regulations: football clubs and agents, take note!

European (and therefore Dutch) anti-money laundering legislation is being overhauled, and this could have a serious impact on professional football

On June 19, 2024, Regulation (EU) 2024/1624 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (the Regulation) was published in the EU Official Journal. This Regulation aims to better protect the financial system against money laundering and terrorist financing.

The scope of the anti-money laundering rules is being expanded, meaning that professional football clubs and football agents will now also fall under this legislation. This is an important development intended to increase financial transparency within the sport.

A wonderful convergence of two of my passions: football and financial law.

Football sector in scope

In a 2022 report, the European Commission identified the money laundering risks in sports, and more specifically, in the football sector.

Net als veel andere sectoren is de sport gebruikt door criminelen om geld wit te wassen en illegale inkomsten te verkrijgen. Voetbal, als veruit de populairste sport ter wereld, is daarbij een voor de hand liggende kandidaat. Net als in de kunstwereld worden criminelen in de sportwereld niet altijd gedreven door financieel gewin. Sociale status, associatie met beroemdheden en de mogelijkheid om in contact te komen met gezagsfiguren kunnen ook motieven zijn voor criminele investeringen.

In recital 24 of the Regulation, the European legislator states, among other things, the following:

The activities of professional football clubs and football agents are exposed to the risks of money laundering and related predicate offences due to various factors inherent to the football sector, such as the global popularity of football, the substantial sums of money, cash flows, and financial interests involved, the prevalence of cross-border transactions, and the sometimes opaque ownership structures. All these factors make football vulnerable to potential abuse by criminals seeking to legitimise illicit funds, thereby exposing the sport to money laundering and related predicate offences.

Relevant in the Regulation is the expansion of the definition of "obliged entities." These entities are regarded as "gatekeepers" of the financial system and are required to screen clients, monitor transactions, and report suspicious activities in order to prevent the misuse of their services for criminal purposes.

Currently, a wide range of financial institutions—such as banks and payment service providers—qualify as such, but this also includes casinos, real estate agents, and certain professional services like lawyers and notaries. Under the new Regulation, the list of obliged entities is being expanded to include, among others, professional football clubs and football agents.

Professional football clubs

The Regulation defines a professional football club as:

a legal entity that is a football club granted a license and participates in national football competitions within a Member State, whose players and staff are contractually employed and compensated for their services, or a legal entity that owns or manages such a football club.

A professional football club is only considered an obliged entity if it carries out transactions related to the following matters:transacties met een investeerder:

• transactions with a sponsor;

• transactions with football agents or other intermediaries;

• transactions related to the transfer of a football player.

The Regulation therefore brings a professional football club within the scope of the anti-money laundering rules only when a specific type of transaction is involved. This can vary depending on the transaction and must be assessed on a case-by-case basis.

Notably, only transactions related to the transfer of a football player fall within the scope, while transactions concerning the transfer of a football coach are not explicitly mentioned.

Football agents

The Regulation defines a football agent as:

a natural person or legal entity that offers intermediary services for remuneration and represents football players or professional football clubs in negotiations aimed at concluding a contract for a football player, or represents professional football clubs in negotiations aimed at concluding an agreement for the transfer of a football player.

Unlike football clubs, football agents—provided they fall within the above definition—seem to always be considered obliged entities under the Regulation.

Similar to the definition of a professional football club, a football agent qualifies as such only when representing football players or football clubs in negotiations concerning a contract or the transfer of a football player.

Exemption

To prevent smaller football clubs from being burdened with administrative requirements, EU Member States may exempt certain clubs from the anti-money laundering rules, provided that the risk of money laundering or terrorist financing is low.

For example, professional football clubs in the top division with an annual turnover of less than €5,000,000 in the past two years can be (partially) exempted from the rules. Member States may also decide to grant exemptions to clubs in lower divisions if it is demonstrated that their activities carry a low risk of misuse.

Impact on football clubs and football agents

The impact of the Regulation on football clubs and football agents is expected to be significant.

Football clubs and football agents that fall within the scope of the Regulation will be required to comply with (expanded) legal obligations, including conducting customer due diligence, monitoring transactions, and potentially reporting suspicious transactions to the competent Financial Intelligence Unit (FIU).

Non-compliance with these rules can lead not only to reputational damage but also to administrative and criminal sanctions.

Although most of the Regulation will enter into force on July 10, 2027, the rules specifically applicable to professional football clubs and football agents will only take effect from July 10, 2029. Nevertheless, it is advisable for the sector to prepare in good time and assess how these new obligations will affect current organizational and business processes.