New European anti-money laundering rules bring football clubs and football agents into the scope

On April 18, 2024, the European Parliament adopted new European rules to combat money laundering, so called AML Package, in a bid to strengthen measures against money laundering and terrorism financing including among other things the sixth AML Directive and a new AML Regulation (“Regulation”) setting out anti-money laundering and counter terrorism financing rules (“AML/CTF Rules”). The proposal includes an extended list of so-called obliged entities, that is entities that are subject to the AML/CTF Rules set out in the Regulation. Among the notable new inclusions in the list of obliged entities are professional football (or, for our US readers: soccer) clubs and football agents marking a significant expansion of obligations for such.

What does it mean for professional football clubs and football agents?

In short, this means that under the new rules, professional football clubs and football agents will be categorised as obliged entities, meaning that both categories will become subject to the rules set out in the Regulation and other regulatory acts within AML-area, as applicable. The background to that, as the legislator expresses it, is the high risk for exposure to money laundering as well as several factors inherent to the football sector such as the global popularity of football, the considerable sums, cash flows and large financial interest involved, cross-border transactions, and sometimes opaque ownership structures, being the cause for high exposure to possible abuse.

Both professional football clubs and football agents are defined in the Regulation, for the purpose of compliance with it:

• Professional football clubs are defined as any legal person that owns or manages a football club that has been granted a licence and participates in the national football league(s) in a Member State of the Union and whose players and staff are contractually engaged and are remunerated in exchange for their services. This will cover football clubs in the national football leagues like German Bundesliga, French Ligue 1 or Italian Serie A.
  
  Professional football clubs are only included in respect of certain transactions. These transactions, which involve dealings with investors, sponsors, football agents, or intermediaries, and transfers of football players, now fall under the requirements. However, Member States are empowered to exempt clubs participating in the first division of the national football league from the requirements in cases of proven low risk when they maintain a total annual turnover of less than €5 million for each of the previous two calendar years. Similar exemptions may also apply to clubs operating in lower divisions (e.g., German 2. Bundesliga or 3. Liga, French Ligue 2 or Italian Serie B), contingent upon a proven low risk assessment.
  
  To facilitate the above exemptions, in full or in part, Member States are tasked with conducting comprehensive risk assessments, evaluating related threats, vulnerabilities, and mitigating factors within the professional football club ecosystem. Additionally, Member
  States are mandated to establish risk-based monitoring activities to prevent the abuse of exemptions granted.
  
  
• Football agents are defined as a natural or legal person who, for a fee, provides intermediary services and represents football players and/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 player.

What professional football clubs and football agents will be required to do?

In general, this means that both categories will be subject to the AML/CTF Rules and will need to comply with such.

Similar to what is applicable to other obliged entities, e.g. banks, professional football clubs and football agents will be required to have in place policies, procedures and controls in order to ensure compliance with the Regulation and AML/CTF Rules and mitigate and effectively manage the money laundering and terrorism financing risks identified in their operations. Both the football clubs and the agents will be required to conduct a business-wide general risk assessment of the ML/TF risks in their operations.

Football clubs and agents must adhere to stringent customer due diligence measures outlined in the Regulation, including, but not limited to, measures to identify, verify and monitor their business relationships with their clients, in relation to the ML/TF risks that they pose, understanding the ML/TF risks associated with the transactions, understanding on whose behalf or for the benefit of whom a transaction is carried out etc. In addition, it will be required to monitor transactions on ongoing basis and fully cooperate with EU’s Financial Intelligence Units (“FIU”) by promptly reporting suspicions to the FIUs and providing necessary information upon request.

Further, similar to what is applicable to other types of obliged entities, football clubs and football agents will need to provide basic training on AML/CFT measures to all those who have a role in implementing it. Also, individuals entrusted with tasks related to compliance with AML/CFT Rules will need to undergo assessment of their skills, knowledge, expertise, integrity and conduct.

Next Steps

While the European Parliament has adopted the new AML package, formal adoption by the Council and publication in the EU's Official Journal are still pending. Once these steps are completed, the regulations will come into effect, ushering in a new era of transparency and accountability in the fight against money laundering and terrorist financing. Notably, the enforcement of these rules take effect five years after entry into force, in contrast to the three-year timeline for other obliged entities.

About the Authors

Eleonora Pavliouk, Julia Klingberg, Johannes Wirtz

Eleonora Pavliouk (Senior Associate) and Julia Klingberg (Associate) are part of Bird & Bird Finance and Financial Regulation team in Sweden. Johannes Wirtz is a partner in the Finance & Financial Regulation team in Germany.