New EU Law Set to Tackle Money Laundering in Major Football Clubs and Cash Schemes

January 16, 2024

The European Union is set to finalize new rules against money laundering for prominent football clubs, large cash transactions, and high-net-worth individuals. A trilogue scheduled for Wednesday evening is anticipated to conclude the EU’s new anti-money laundering (AML) regulation, as reported by Euronews, possibly making this official before the upcoming June European elections.

Even though negotiations on AML regulation faced obstacles in December, lawmakers and governments are now ready to expand its scope. This initiative seeks to scrutinize the significant and often unclear financial transactions within international football.

Even with a potential agreement on Wednesday, the EU has not finalized the location for a new AML agency tasked with supervising 40 major banks. The week starting January 29 will conduct hearings among the nine cities including Frankfurt, Paris, Madrid, and Rome, bidding to host it.

Who Will Face Scrutiny in New Football AML Rules?

Current AML regulations mandate obligated entities such as banks and real estate agents to conduct background checks on their customers. However, the AML regulations are extended to the football sector to scrutinize high-risk transactions.

Euronews further reported that in a document dated January 6th, prepared by the Belgian government, leading intergovernmental talks on the law, outlined that extension into the football sector “would be applied only to the riskiest transactions,” specifically those involving investors, agents, and sponsors.

This implies that regular fans won’t have to undergo ID verification while purchasing season tickets. However, it remains unclear whether football agents will be categorized as obligated entities, and if member states can exempt teams with lower risk based on financial, cross-border, or league status.

The proposed rule, which requires consensus from both lawmakers and member states assembling in the EU Council, is stirring controversy, as they plan to prohibit cash transactions above €10,000. This stands in contrast to the European Parliament’s Advocacy for a lower limit of €7,000.

AML Rule to Address Money Laundering Scandals in the Football Sector

There’s a possibility that Members of the European Parliament (MEPs) could have requests granted to impose extra checks on wealthy individuals. But this doesn’t imply that wealthy individuals to be scrutinized just because of their wealth, as stated in the Belgian document.

Nevertheless, banks and trust providers would need to verify the source of funds while delivering personalized investment management services to clients holding assets exceeding €5 million.

As a broader strategy against financial crimes like money laundering and terrorist financing, the European Parliament and the EU Council have agreed on the development of the AML Authority. This development seeks to ensure compliance and enforcement of robust EU regulations. Following the EU proposal, the authority will supervise high-risk entities and assist financial intelligence units to analyze and tackle suspicious activities.

The Parliament has incorporated new measures to counteract the evasion of targeted financial transactions, emphasizing the AMLA’s role in ensuring obligated entities comply with the sanctions.

Also read: What are the EU’s Anti-Money Laundering Directives?