K.Treppides & Co Ltd: Football and Money Laundering (“ML”)
K. Treppides & Co Ltd
It has been identified years back at European and global level, that sports and especially football is being used by criminals to launder dirty money and derive illegal income.
The bad news forcriminals is that the European Commission has devoted 8 pages in its Money Laundering Assessment Report (Brussels 24.07.2019, SWD(2019) 650 final) for the Money Laundering (“ML”) through football.
Investments of huge amounts of money by criminals into professional sports are not always motivated by economic gain, but social prestige,as well as the prospect to be connected and create networking with authorities and celebrities. Such contactsresult in legitimizing themselves by appearing alongside famous people, entrepreneurs and authorities.
There are various case studies encountered by the European Commission, which are now being used as examples and mentioned in their report, regarding the methods that the dirty money is laundered or derived through football.
An organized criminal group has established various websites in an online betting platform where any person could bet on sport events (i.e. football). The group was involved in attempts to fix matches in European countries. At the same time, they have gambled in the Asian market where they guaranteed big financial gains from the fixed matches arranged. In this way they were presented as having legitimate gains from gambling and from the income derived from the online betting platform. The Commission noted that this method of money laundering is often used by criminals involved in drug trafficking, illicit tobacco and smuggling.
Targeting football clubs in financial distress
Another criminal networkwas targeting EU football clubs in financial difficulties. The clubs were approached by individuals acting as front men. The front men were willing tohelp the clubs financially, but in essence the money was coming from unknown persons and unknown sources.
Bribery and Corruption
Dirty money are also the funds accepted by football players, referees, coaches and other parties in football, with the intention to fix the result or other events of a match. Usually the receivers of such money simultaneously start to operate other businessestojustifythe income which wasfundamentallysourced from bribery and corruption schemes. The new businessesare therefore the laundries of the dirty money.
The increased use of image and sponsorship contracts
The increased use of image, advertising and sponsorship contracts could be intended as tools for tax evasion since in many cases the money from such contracts are transferred to companies in high risk third countries rather than to the personal bank account of the real beneficiary, in an effort to avoid declaring this income and ultimately avoid the tax payment to the authorities.
Based on the few examples above, it is apparent thatprofessional sports and especially football, which is the most popular sport on the planet, can be the perfect vehicle for money laundering. In this respect, the European Commission has concluded that the level of money laundering vulnerability in the professional football sector is considered moderately significant/significant.
On a similar note, the Commissionadmits that the Anti Money Laundering checks and measures currently being applied in the sector, are insufficient nor effective and still view football as an attractive vehicle for money laundering.
The mitigating measures proposed by the Commission including, keeping a register of players’ agents, the requirement for suspicious reports, the record keeping for at least 5 years, the identification of investors in football clubs and the obligation to conduct independent audit are not considered sufficient, and it illustrates that even the European Commission is currently hesitant to enforce stricter and more effective measures in the regulation of the professional football business.
It is important toemphasize that professional football cannot exist without its most important factors, itsspectators who amount to roughly 50% of the global population,and neither its 36million of professional football players. Hence there is a great need to protect the important parties of football, respect the 50% of the planet’s population and find more ways to combat the few hundreds of thousands that are illegally and unethically deriving money from it.
The European authorities and their Cypriot representatives in the European Parliament shouldpush for the inclusion of the professional football sector in the Anti Money Laundering framework at EU level in order to oblige all the member states to exercise sufficient checks, due diligence and reports as required by other sectors. Leaving the checks and the measures on the discretion of the member states and their local authorities, unfortunately is inadequate and currently provides a way for unethical people to exploit the weaknesses within the system and hide behind the absence of legal requirement.
Considering the above, it is my view that the local authorities in collaboration with the Cyprus Football Association and the specialized AML providers, need to actively discuss the source of the problem and suggest possible measurers to the European associates in order to prove our willingness as member state, to combat the money laundering in football, as well.
K. Treppides & Co Ltd is the largest independent consulting company in Cyprus with an established international presence and offices in Great Britain and Malta. Today the company employs approximately 200 professionals. It offers a full range of consulting, tax, accounting services to groups, companies and investors operating internationally in a variety of financial and business sectors. The Company, which started its operations in 1985, has 35 years of expertise and an elite team of experienced executives who can guide and assist investors and businesses during the establishment process and subsequent investment activity in Cyprus and internationally.
Nicosia: Treppides Tower, Kafkasou 9, Aglantzia, CY 2112, Nicosia, Cyprus
Limassol: Kristellina Tower, 12 Arch.Makarios III Avenue, Mesa Geitonia, CY 4000 Limassol, Cyprus
London:7 Milner Street, London SW3 2QA
Malta: Level 1, Somnium, Tower Road, Swatar, Birkirkara BKR 4012