This blog post is the first part of a joint series by Annerton and GRUENGOLD LEGAL on the topic of ‘Professional football and money laundering prevention’.
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Professional football and money laundering prevention – Part 1
The Anti-Money Laundering Regulation (EU) 2024/1624 (AMLR) is part of the new EU Anti-Money Laundering Package and aims to combat money laundering and terrorist financing through uniform rules in EU Member States.
Key points include stricter due diligence requirements, an EU-wide upper limit of €10,000 for cash payments and an expansion of the group of obligated parties for whom money laundering prevention will also be a relevant business issue in the future. Under the AMLR, the expanded group of obligated entities will also include professional football clubs and football agents from summer 2029 onwards.
Compliance with the anti-money laundering regulations will be monitored not only by the national supervisory authorities but also by the newly created EU-wide supervisory authority, the Authority for Anti-Money Laundering and Countering the Financing of Terrorism – AMLA.
Professional football under the radar of anti-money laundering supervision
Given the enormous transfer fees and revenues generated in professional football, it is surprising that this sector and its main players will only fall within the scope of the EU-wide harmonised Anti-Money Laundering Regulation by now and not much earlier. Other sports are not subject to anti-money laundering regulation – even though they have comparable market structures and risks.
The AMLR cites the considerable (transfer) sums, international cash flows, financial interests, the frequency of cross-border transactions and the sometimes opaque ownership structures[1] as reasons for including professional football in the circle of those subject to anti-money laundering obligations. Other professional sports also have these structures and relevant turnover volumes, but unlike professional football, they have not come under the radar of anti-money laundering supervision.
The countdown for professional football has begun
From 10 July 2029, professional football clubs and football agents will be required to comply with regulations under the AMLR. That’s still more than three years away, which might seem like plenty of time and no reason to rush into frantic activity just yet. However, considering that not only UEFA Champions League clubs and internationally established player agencies are subject to the new AML regulations[2], but the possibility of exemption from the requirements of the AMLR under Article 5 AMLR for clubs in the highest national league (i.e. for women and men in the German Bundesliga) with an annual turnover of €5 million or more in the previous two years does not apply – an amount that professional football clubs in the third division in Germany can easily achieve – the broad scope of application in an industry that is unlikely to have sophisticated money laundering awareness or an IT environment specifically designed to monitor suspicious money movements becomes apparent. Furthermore, the AMLR does not differentiate between men’s and women’s football clubs.
Incidentally, the relief measures for professional football clubs that Member States may provide for under Article 5 AMLR after conducting a risk assessment regarding the applicability of the AMLR are not intended for football agents.
The scope of application of the AMLR in professional football
The AMLR thus expressly extends the circle of obligated parties to include football agents and professional football clubs.
For professional clubs (but not for football agents (!)), the scope of application is limited in terms of content: The obligations of the AMLR apply to transactions between football clubs and investors, sponsors (including advertising), football agents and other intermediaries, as well as to player transfers.
The reason for this selection is – according to the explanations provided by the European legislator in the recitals to the AMLR – that the “(…) activities of professional football clubs and football agents are exposed to risks of money laundering and its predicate offences due to several factors inherent to the football sector, such as the global popularity of football, the considerable sums, cash flows and financial interests involved, the prevalence of cross-border transactions, and the sometimes opaque ownership structures. All those factors expose football to possible abuse by criminals to legitimise illicit funds and thus make the sport vulnerable to money laundering and its predicate offences. Key areas of risk include, for example, transactions with investors and sponsors, including advertisers, and the transfer of players. Professional football clubs and football agents should therefore put in place robust anti-money laundering measures, including carrying out customer due diligence on investors, sponsors, including advertisers, and other partners and counterparties with whom they transact.” [3]
Roadmap for professional football clubs and football agents
From summer 2029, the general AMLR obligations (the details of which are to be further specified by AMLA guidelines/RTS) will also apply to professional football clubs and football agents.
However, it is not advisable to wait until then to implement the AMLR requirements. The AMLR’s list of requirements for obligated parties is demanding, and the organisational and technical development of an adequate compliance structure is time-consuming and resource-intensive. Violations of the AMLR are likely to result in high fines in the future and also pose a considerable reputational risk for the parties involved.
Required anti-money laundering setup in professional football
Professional football clubs and football agents should therefore start setting up a money laundering prevention system within their organisations by now, taking the following aspects into account, among others:
Risk assessment
The development and implementation of a detailed anti-money laundering risk analysis must be at the heart of money laundering prevention for professional football clubs and football agents.
In addition to business area risk analyses, customer and transaction risk analyses must also be carried out. In the case of transfer deals, for example, attention must be paid to complex payment structures and chains of intermediaries. In the clubs’ cooperation with football agents, attention must be paid to the transparency of beneficial owners and the contractual arrangements, while in the area of sponsorship and partnerships, one issue that is sure to arise is the potentially increased risk associated with sponsors from non-EU countries.
Customer identification (KYC)
The identification of investors, sponsors, advertising partners, intermediaries and AMLR-relevant counterparties in transfer transactions will be just as challenging for professional clubs and football agents as the ongoing monitoring of business relationships and transactions, whereby enhanced due diligence must be exercised in cases of higher risk (e.g. in relation to politically exposed persons (PEPs), involvement of high-risk third countries).
Training and general AML awareness
The clubs and football agents concerned must establish rules and regulations with procedures, controls, conflict of interest rules and policies.
Regular staff training will cover typical money laundering scenarios in football, an explanation of AMLR-specific requirements for football, dealing with intermediaries, identifying suspicious sponsors and investors, and compliance with documentation requirements.
Appointment of an anti-money laundering officer and a compliance manager
As the AMLR includes professional football clubs and football agents among the parties subject to its requirements, these players will be subject to the general compliance requirements that currently apply to banks and payment service providers, for example, from 10 July 2029.
This includes selecting and appointing an anti-money laundering officer who is responsible for the strategies, procedures and controls for the day-to-day implementation of the requirements for combating money laundering and terrorist financing at the obligated entity, including with regard to the implementation of targeted financial sanctions, and who serves as a contact point for the supervisory authorities (Art. 11 AMLR). The anti-money laundering officer is also responsible for reporting suspicious transactions to the central reporting office – in Germany, this is the Financial Intelligence Unit (FIU).
Similarly, from summer 2029, professional football clubs and football agents will be required to appoint a compliance manager to ensure compliance with the AMLR requirements.
Cooperation with supervisory authorities
It is not yet clear who will supervise professional football clubs and football agents in Germany in future with regard to money laundering prevention and counter-terrorism. However, it is to be expected that the AMLA itself will set the standards and that the German legislature will appoint one or more national supervisory authorities.
Suspicious activity reports
Professional football clubs and football agents must ensure, both organisationally and technically, that suspicious activity reports are forwarded electronically and without delay to the FIU. To this end, the parties involved must identify and systematically examine relevant suspicious circumstances, i.e. all transactions and business transactions that are atypical, implausible or risky in nature (unusual transfer structures, payment requests via third parties who are not contractual partners, multiple changes of beneficial owners at the contractual partner).
What does this mean in concrete terms for professional football in the coming months?
As explained above, compliance with the anti-money laundering obligations under the AMLR will change the daily business not only of professional football clubs, but also, in particular, of football agents. It follows that a comparison of the current compliance status with the future requirements must be carried out now in order to be on track by 2029 at the latest.
[1] See Recital 24 of the AMLR.
[2] Article 2(53) of the AMLR defines a football agent 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’.
[3] See Recital 24 AMLR.
