Professional football clubs as obliged entities under the Money Laundering Regulation

Professional football clubs will become "obliged entities" under the EU AML Regulation (Regulation (EU) 2024/1624 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing; as we reported 2023 and 2024). While banks and other obliged entities have to start implementing the requirements as early as 2027, football clubs still have some time to prepare: The regulations will not apply to them until 10 July 2029. Clubs should use this transition period to prepare for the new requirements both structurally and organisationally.

From the pitch to compliance – what lies ahead for clubs?

Instead of the usual matchday analysis, we will take a detailed look at the EU Regulation. This article serves as a practical guide and supports clubs off the pitch.

The EU AML Regulation – uniform standards for Europe

After years of varying national implementations and guidelines, the EU AML Regulation introduces a binding minimum standard applicable across Europe. Unlike directives, the Regulation takes effect directly in all Member States – there is no need for individual countries to adapt it. For German professional football clubs, this means the new rules apply equally to all European competitors and ensure a level playing field.

Why is professional football in the spotlight?

As early as 2009, the Financial Action Task Force (FATF) issued a stark warning about the risks in its report "Money Laundering through the Football Sector": Proceeds from criminal activities can be channelled into the legal economy through financial transactions such as the purchase of clubs, player transfers, betting, image rights, and sponsorship and marketing agreements. Now, almost twenty years later, the EU AML Regulation ensures that the risks in the football sector are addressed effectively.

Once they are among the obliged entities, professional football clubs become so-called "gatekeepers" of the EU financial system. In the context of the EU AML Regulation, the term "gatekeeper" refers to the individuals and institutions whose professional role involves operating at the interface where criminals attempt to channel illegally acquired assets into the legitimate financial and economic system and conceal them.

After all, the football business entails considerable financial risks. On the one hand, very large sums of money are in circulation; on the other hand, the value of some transfers cannot be determined objectively and there are many ways to conceal the figures. The world of professional football is therefore an ideal playing ground for money launderers, as nearly all known money-laundering methods are present.

What is a professional football club? And who will be the gatekeeper?

According to the legal definition in the EU AML Regulation, a professional football club means 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 (Article 2 (52)). In practical terms, this means that at least all clubs from the first professional league, the "Bundesliga", through the 3rd league are regarded as professional football clubs.

The EU AML Regulation does allow Member States to grant exemptions and to exempt professional football clubs, in full or in part, from the requirements of the Regulation, amongst other things, on the basis of the proven low risk posed by the nature and the scale of operation of such professional football clubs (Article 5). Given the high sums paid in German professional football, German professional football clubs should not get their hopes up too high in this regard.

Nevertheless, there is some good news for professional football clubs. The EU AML Regulation does not apply across the board. To stick with football jargon: professional football clubs are becoming "flying" gatekeepers. This means that, in accordance with Article 3 (3) (o) EU AML Regulation, they are only required to comply with the provisions of the Regulation in respect of the following transactions:

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

Specifically: What do football clubs need to do?

1. Introduce a compliance management system

If they have not already done so, professional football clubs should now introduce a comprehensive compliance system or expand their current one. In particular, organisations should analyse their own specific risks under anti-money laundering legislation. In a second step, the organisation should be structured with a view to any risks that have been identified. Clear reporting lines and clear accountability structures have to be established and specific tools should be used, where necessary. In addition, trained staff should be recruited and a plan should be developed to provide them with regular, sector-specific training in future.

First of all, it's important to consider what specific risks the professional football club faces and how they can be adequately addressed.

2. Carrying out due diligence (KYC – Know Your Customer)

The customer due diligence requirements are the heart of the prevention of money laundering. They include

• identifying the customer or the contracting party,
• identifying the beneficial owner of the customer or the contracting party,
• obtaining information about business activities and the source of funds,
• monitoring continuously.

3. Submitting suspicious activity reports

Submitting suspicious activity reports is just as important as fulfilling due diligence requirements.

To be able to do this, professional football clubs must have a compliance management system in place, and specially trained staff so that suspicious transactions can be identified in the first place. It is clear that all of these measures go hand in hand.

Professional football clubs must act swiftly if a suspicious transaction is detected. Any suspicious activity must be reported to the competent authorities office without undue delay, i.e. without culpable delay. There is no time to waste here. Professional football clubs would be well advised to take this obligation seriously, as failure to do so is punishable by a fine. 

It is particularly important that the customer or contracting partner is not informed that a suspicious activity report has been filed.

4. Compliance with financial sanctions

A new development not only for professional football clubs but also other obliged entities is that the EU AML Regulation places the regulatory focus on preventing the non-implementation and evasion of targeted financial sanctions. This means monitoring compliance with financial sanctions is now part of the obligations under anti-money laundering legislation. This supplements the existing obligations to comply with EU sanctions regulations. In this context, it makes sense to incorporate compliance with financial sanctions into the KYC process. In particular, checking against financial sanctions lists should be a standard part of the KYC process.

What should every professional club be doing right now – before 2029? 

1. Determine status: clarify whether the club qualifies as a professional football club within the meaning of the Regulation 

2. Risk assessment: conduct a comprehensive anti-money laundering risk assessment, taking into account the club’s specific activities

3. Gap analysis: identify existing compliance measures and any gaps in relation to the new requirements

4. Resource planning: budgeting and staffing for anti-money laundering compliance

5. Establish a compliance organisation:

• appoint an anti-money laundering compliance officer
• establish a compliance department
• define clear responsibilities and reporting lines
• develop policies and procedures
• create an anti-money laundering compliance manual
• standardise KYC processes for investors, sponsors and player transfers
• implement a suspicious activity reporting system
• introduce systems to check sanctions lists
• establish a documentation system for all due diligence checks
• integrate screening tools for new business partners

6. Training programme:

• develop a training programme for all relevant staff
• conduct regular training sessions on anti-money laundering issues
• raise awareness of the risks associated with player transfers and sponsorship

7. Continuous improvement:

• review and update the risk assessment on a regular basis
• adapt compliance measures to new risks
• participate in industry initiatives to exchange information

Professional football clubs should get the ball rolling now and not drag their feet when it comes to implementing these measures

Experience from the past (for example, implementation of the GDPR) shows that those who act early have a clear advantage. Professional football clubs now have the opportunity to identify specific weaknesses, test solutions and fine tune their compliance strategy. The fact that the EU AML Regulation will apply to professional football clubs at a later point in time means they can learn from the experiences of other obliged entities. Nevertheless, they should not wait– the sooner these measures are implemented, the better prepared the clubs will be for the new requirements.