It is fascinating to see that the Committee on Economic and Monetary Affairs (ECON) and the Committee on Civil Liberties, Justice and Home Affairs (LIBE) of the European Parliament do not understand what ‘anti-money laundering’ (AML) and ‘combating terrorist financing’ (CFT) are about.

They want to add football clubs as obliged entities and their reasoning is funny, in their draft report they write (markup by me):

High-level professional football clubs and football associations, as well as sport agents in the football sector, are therefore entities posing high risks and should therefore be added to the list of obliged entities.

I am dumbfounded…

Do the committees know what AML/CFT is about?

In the system of European AML legislation, a high risk should result in a group of entities being classified in Section 4 of Chapter III of the regulation (enhanced customer due diligence) and in adding such types of entities to annex III of the regulation (higher risk factors).

The presumption is that a suitable company is designated as a obliged entity under AML legislation. Because banks facilitate financial transactions, it was assumed that they are suitable for detecting crime (‘money laundering’) and for that reason in the beginning of AML legislation they were designated. Later, a number of other companies with similar activities (such as crypto providers) were added. The designation as a obliged entity should have a well-founded reason, which is lacking here.

There is also the question of who the customers of a football club are that the club has to conduct customer due diligence on. Should football clubs collect personal data from all their supporters and investigate the origin of their funds? Will they be able to respect the data protection rights of their ‘customers’?

It sounds like a very bad idea to designate football clubs as obliged entities.

Quotes from the draft report

Proposed new recital:

(18a) According to a report from the FATF of July 2009 entitled ‘Money Laundering through the Football Sector’, “the professional football market has undergone an accentuated growth due to a process of commercialisation. Money invested in football surged mainly as a result from increases in television rights and corporate sponsorship. Simultaneously, the labour market for professional football players has experienced unprecedented globalisation – with more and more football players contracted by teams outside their country and transfer payments of astounding dimensions. The cross border money flows that are involved may largely fall outside the control of national and supranational football organisations, giving opportunities to move and launder money. At the same time money from private investors is pouring into football clubs to keep them operating and can give the investor long term returns in terms of media rights, ticket sales, proceeds of sales of players and merchandising.” In its report of 24 July 2019 to the European Parliament and the Council on the assessment of the risk of money laundering and terrorist financing affecting the internal market and relating to cross-border activities, the Commission assessed professional football and stated that “whilst it remains a popular sport it is also a global industry with significant economic impact. Professional football’s complex organisation and lack of transparency have created fertile ground for the use of illegal resources. Questionable sums of money with no apparent or explicable financial return or gain are being invested in the sport.” Professional football is therefore a new sector posing high risks and high-level professional football clubs, along with sports agents in the football sector and football associations in Member States which are members of the Union of European Football Associations, should be considered obliged entities for the purposes of this Regulation.

Proposed new definitions (article 2):

(14a) ‘high-level professional football club’ means a legal entity established in a Member State which owns or manages a professional football club of which at least one team plays in the championship or championships of the highest level of the competition in that Member State;
(14b) ‘sports agent in the football sector’ means a person that provides private job placement in the football sector for prospective paid football players or for employers with a view to signing an employment contract for paid football players;

New obliged entities (article 3 AMLR)

(la) sports agents in the football sector;
(lb) high-level professional football clubs;
(lc) football associations in Member States which are members of the Union of European Football Associations.

More information:

• Draft AMLR of 20 July 2021.
• Draft report ECON/LIBE proposing amendments to the draft AMLR.
• AMLR procedure file European Parliament.

This is part 2 of the series Horrors of European legislation against crime (AML/CFT) that describes the European plans to fundamentally change AML/CFT legislation.