The lawmaker in the box: How new EU legislation impacts money laundering prevention in professional soccer

Preventing money laundering and terrorist financing has become a constant concern for lawmakers. In Germany alone, the Money Laundering Act has been revised sixteen times since 2020. The EU is also taking action, introducing significant new regulations in recent months. These rules no longer just apply to banks and financial institutions - now, professional soccer is also under scrutiny.

Background: Money laundering and terrorist financing as a major problem

Money laundering - the smuggling of illegally acquired funds into the legal economic cycle - is a major concern for the EU and its member states. Every year, it causes hundreds of billions of euros in losses in the EU alone - and that's without even mentioning the considerable security risk associated with this form of (often organized) financial crime.

For decades, the EU has been committed to combating money laundering and terrorist financing and has issued several directives and regulations in this area. Legislative implementation and prosecution generally take place at member state level. In Germany, the Financial Crime Prevention Act (Finanzkriminalitätsbekämpfungsgesetz) has just come into force, which, among other things, tightens the national money laundering regulations again and introduces new regulations for the German authorities.

On a larger scale, the EU launched a major anti-money laundering (AML) reform package, which includes new rules that apply directly across all member states. A key part of this initiative is the creation of an EU-wide AML authority with expanded enforcement powers (which may find some of those who already consider the EU to be a “bureaucracy monster” with their opinion confirmed).

Professional soccer as a money laundering problem (?): Expansion of the circle of obliged entities

Not every company is obliged to comply with AML regulations, but only those that the EU hopes will be particularly enabled at recognizing suspicious transactions as “gatekeepers” (so-called “obliged entities”). However, the group of obliged entities is now quite broad and ranges from banks, financial service providers and insurance companies to lawyers, tax advisors, real estate agents and (certain kinds of) goods traders. The new EU regulations now extend AML obligations to cryptocurrency businesses and professional soccer clubs.

AML Obligations: Collection of data and register jungle

For organizations covered by AML laws, compliance primarily involves collecting and verifying customer data. This includes identifying business partners and beneficial owners, gathering personal details like names and addresses, and in some cases, verifying the source of funds. The new EU rules will make these requirements even stricter and oblige them to collect further data.

Apart from that, registering data on beneficial owners remains important. Since 2017, most European countries have had UBO registers in which the ultimate beneficial owners of companies are to be entered. These registers are to be linked with each other in the future, but who has to be reported as a beneficial owner and what the report actually has to look like varies from country to country. The new AML regulation aims to standardize these processes and improve coordination.

Outlook and need for action

The EU money laundering package will be implemented in various stages over the next few years. So there is no reason to panic - but just as it is important to play with foresight in soccer, it is also important to anticipate future developments in legal matters. Businesses should start assessing how these regulations may affect them and allow ample time for compliance. The full impact of these rules will become clearer as further detailed guidelines are released.