Criminals and oligarchs in EU’s sights with new bill targeting football fraud

Not for the first time in the history of the European parliament, it all started in Belgium. An investigation into alleged bribery, money-laundering, forged transfer contracts and the involvement of organised crime at the highest levels of professional football that began in 2018 eventually implicated almost 60 agents, administrators, referees and coaches.

Known as Operation Clean Hands, the level of alleged corruption it uncovered not only led to the establishment of new strict financial regulations for clubs in Belgium but also opened eyes in the corridors of power in Brussels. In 2019, football was added to the European Union’s watchlist of money-laundering risks, with a United Nations report estimating that around $140bn is laundered through the game every year. Yet while many leagues already have strict financial regulations aimed at preventing fraud, the French MEP, Damien Carême, believes the concern has been more focused on complying with financial fair play regulations than stopping corruption.

“Criminals, oligarchs and the rich and powerful have privileged ways of laundering their dirty money, and football is one of them as experts assessments and scandals have shown time and again,” Carême told the Guardian. “What is more important: preventing corruption, tax fraud, trafficking of all kinds and the loss of confidence of citizens in their governments, or preserving the competitiveness of football clubs? For the European parliament, the choice was quickly made.

“Can fans really enjoy the game when you know the money used to buy your favourite player comes from organised criminal groups proceeds or from a Russian oligarch who supports the war of aggression against Ukraine? I personally cannot.”

On Wednesday, member states from the European parliament will vote to include the football industry in its sixth anti-money laundering directive. No late hiccups are expected and it will mean that, from 2029, most professional clubs and every agent within the European Union will be required to verify their customers’ identities, monitor transactions – including player transfers – and report suspicious transactions to their relevant Financial Intelligence Unit (FIU).

Known as “obliged entities”, they will also be required to identify and publish beneficial owners who own at least 15% of the club in transparency registers and design and implement appropriate transaction monitoring procedures to identify suspicious transactions.

So seismic are the changes expected to be that policymakers have extended the adaptation period from the usual three years to five, having seen the difficulties some clubs in Belgium have faced in complying to similar regulations. Insiders say it is no coincidence that the new legislation will be passed while Belgium is holding the six-month rotating presidency of the European Council, with the pressure on to deliver ahead of June’s European elections.

Yet while the new rules are seen as an important step against the fight against corruption, critics have argued the legislation has been rushed through without being subject to an extensive impact assessment over a number of years. It is understood that Uefa has cautioned its stakeholders over the process due to concerns that none of usual background work had taken place because the legislation was added as an amendment to an existing bill by the European Parliament in 2021.

It is believed there was no request for information from European football’s governing body or its stakeholders until a very late stage in the process, with Football Supporters Europe (FSE) having also expressed concerns over the original proposals and recommended creating a tailored setoff rules for the sport following a lengthy consultation period.

The European Club Association, which represents the continent’s biggest clubs, is also believed to have felt sidelined from negotiations with the EU and voiced its frustrations through Uefa and national governments – in particular from France, the Netherlands and Germany. But despite one meeting described as “unpleasant” by an EU source, in which both sides were at loggerheads over the proposal to include all professional clubs in the new legislation, they have agreed to a series of exemptions that will allow clubs with turnovers of under €5m a season to avoid the new laws that will also target crypto-asset service providers and traders of luxury cars, aircraft and yachts.

Exemptions will only be given if clubs can show they are “proven low risk” following assessment by The European Commission’s anti-money laundering authority (AMLA), which it was confirmed in February will be based in Frankfurt.

Those changes are understood to have softened Uefa’s initial opposition to the bill, with the European parliament and the European Council having reached a preliminary agreement on the new measures in January, before their ratification by MEPs on Wednesday.

“Uefa shares the objectives of policymakers and stakeholders to tackle financial crime and to protect the sustainability and integrity of the game at all levels,” a spokesperson told the Guardian. “Football stakeholders and authorities at European and national levels will work hand in hand in the next years to ensure optimal national implementation of EU rules as well as to help avoid unintended consequences across Europe’s diverse football landscape.”

Clubs are also believed to have concerns about how the new rules may affect the competitiveness of their clubs compared to the rest of the world – an argument that is understood to have puzzled EU policymakers who say they are attempting to “harmonise” the fight against corruption in the sport. “Everyone acknowledges that there is a big issue in football that needs solving and the point of legislation is to try to find the right balance,” says one source.

But while British clubs will remain outside their jurisdiction for now, insiders expect that they could follow suit if it proves successful. “There is money laundering in football at all levels. You have criminals operating in connection with several European countries,” adds the source. “But now there is no hiding and the clock is ticking.”