According to reports surfacing in Italian media, the Serie A giants were slapped with a €30m fine for breaching FFP laws and denied entry for this season's UEFA Europa League.
UEFA have since released a statement confirming the club will not be able to participate in Europe for two seasons.
"The Adjudicatory Chamber of the Club Financial Control Body (CFCB), chaired by José Narciso da Cunha Rodrigues, has taken a decision in the case of the club AC Milan that had been referred to it by the CFCB Chief Investigator for the breach of the UEFA Club Licensing and Financial Fair Play Regulations, in particular the break-even requirement," the statement read.
"The club is excluded from participating in the next UEFA club competition for which it would otherwise qualify in the next two (2) seasons (i.e. one competition in 2018/19 or 2019/20, subject to qualification).
"This decision may be appealed to the Court of Arbitration for Sport, in accordance with Article 34(2) of the Procedural rules governing the UEFA Club Financial Control Body, as well as Articles 62 and 63 of the UEFA Statutes."