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Thibault Fouquaert
6 dagen geleden

Professional football in scope of the anti-money laundering regime: Will it be a game changer?

Sofie Gotelaere, Gema Souvenir and Louis Vandercruysse

Earlier this year, the EU decided to bring professional football in scope of the anti-money laundering (AML) regime. This decision was preceded by Belgium, that decided to expand its national preventive AML legislation to Belgian professional football in the summer of 2020. From the Belgian experience, can we draw lessons for Europe? And will the AML regime be a game changer for the sport?


The most important unimportant thing in life 

Professional football is not only the most popular sport in the world (GWI, 2018), it is also a large and growing economic sector. The sport continues to attract a growing number of spectators and financial resources. According to the Fédération Internationale de Football Association (FIFA, 2023), nearly five billion people engaged with the 2022 World Cup in Qatar, representing over 60% of the world’s population. The European football market generated a record revenue of €29.5 billion during the 2021-2022 season, an increase of 7% compared to the previous season (Deloitte, 2023). The growing economic and social importance of the sport brings about many positive outcomes, such as access to sporting facilities for a larger number of people, but it can also make the sport more vulnerable to various types of crime, including fraud and money laundering (De Sanctis, 2014).


Repeated scandals

The latter has been illustrated by a series of recent scandals involving many of football’s stakeholders, including clubs, players, agents and even officials of its governing bodies. In 2015, nine FIFA officials were charged with racketeering, wire fraud, and money laundering in the so-called ‘FIFA gate’ case. They allegedly received more than $150 million (about €138 million) in bribes related to media and marketing rights for major football events around the world (U.S. Department of Justice, 2015). Later that year, revelations from the Football Leaks reports exposed the involvement of prominent European clubs, players and agents in several crimes, including tax fraud and money laundering (Buschmann and Wulzinger 2018). More recently in 2021, an undercover investigation by Al Jazeera showed the willingness of English football clubs to receive money from criminals, thereby helping them to launder the proceeds of their crimes (Al Jazeera Investigative Unit, 2021).


Bringing football in scope of the AML regime

Against this background, it is hardly surprising that a growing number of questions have been raised about the influx of large sums of money into professional football and the need for governance in this area (see, e.g., FATF, 2009). After having acknowledged the problem on various occasions (e.g., the European Commission’s (2007, p. 16) statement that it ‘will continue to monitor the implementation of EU anti-money laundering legislation in the EU Member States with regard to the sport sector’ in its White Paper on Sport), the European Union (EU) took a decisive step in early 2024 to bring high-level professional football clubs and football agents within the scope of the EU’s AML regime. In recognition of the significant implications for the sector, the new rules have a five-year implementation period. An important decision at the Belgian level preceded the European one. Indeed, in July 2020, Belgium opted to go beyond the obligations of the 5th European AML Directive, and decided to already subject Belgian professional football clubs, football agents, and the Royal Belgian Football Association (RBFA) to preventive AML legislation. The decision is seen as a response to allegations of match-fixing, tax fraud and money laundering at the highest level of Belgian professional football, as revealed by the criminal investigation ‘Operation Clean Hands’, which was brought to the public’s attention in 2018. Initially, a one-year implementation period was outlined, but to date the legislation has not been fully implemented (for example, it does not yet apply to football agents).


Lessons for Europe

While it may be too early for a full analysis of the regime, given the significance of these developments, it is worth reviewing the Belgian experience. Shortly after the decision was taken in Belgium, Appermont and Bull (2023) highlighted several challenges to the application of the AML regime to professional football. These include the significant administrative burden, the difficulties of applying regulations originally designed for credit and financial institutions to the professional football sector, and the severe time constraints imposed by transfer deadlines.  

In addition to these challenges, we highlight three lessons that could help to improve the AML regime for professional football. First, contrary to the Belgian regime, the EU proposal does not incorporate football governing bodies as obliged entities. This is rather odd, as football governing bodies have been implicated in corrupt and money laundering practices in the recent past (Esposito, 2016; Reider-Gordon, 2014). Furthermore, professional clubs are required to comply with the licensing requirements of their (con)federations, which include, among other things, providing financial statements. Hence, football governing bodies possess a plethora of information about their affiliated clubs, which could be of interest in the prevention of money laundering and the detection of its predicate crimes.  Second, the Belgian AML legislation does not apply to transactions between professional football clubs and investors. Given the high money laundering risks associated with such investments, this seems to be a remarkable choice. While some national football governing bodies already screen (prospective) club owners and directors through so-called fit-and-proper person tests, owners and directors in other leagues still have relatively little to answer for. As the football sector’s efforts to regulate ownership of clubs are not always effective in excluding suspicious individuals and their illicit funds (Medhi, 2016), the AML regime could assist in preventing that precise event. The EU legislators did seem to have this in mind, as transactions between professional football clubs and investors are covered by their AML proposal (Council of the European Union, 2024). Third, both the Belgian regime and the EU proposal designate ‘professional’ football clubs as obliged entities, thereby subjecting clubs to preventive AML legislation on the basis of their sporting performance (which, in principle, is not predetermined). Thus, once clubs are relegated to a lower division, their obligations under AML legislation come to an abrupt end. Conversely, clubs that are promoted to the professional level suddenly have to comply with a full range of AML obligations. The EU proposal, as opposed to Belgian AML legislation, addresses these abrupt changes to some extent, by foreseeing that Member States may decide to exempt low-risk professional football clubs from the AML obligations. However, clubs may still face a number of challenges in becoming AML compliant, which raises the question as to whether a phased introduction or guidance should be foreseen to assist them during their transition. 


Will it be a game changer?

Considering the implementation period, it will take some time before we can assess whether the AML regime really makes a meaningful difference for professional football. The enforcement of existing AML regulations around the world remains notably inadequate, suggesting that the further expansion of an already struggling regime may prove ineffective. This does not mean that the initiative to subject professional football is unimportant. For professional football, where the issues are so diverse that it has even been described as having a ‘culture of corruption’ (Nelen, 2022), the introduction of this regime could offer a chance for reform.

The sector has already shown some appetite for change through self-regulation, for example by introducing transparency measures in the transfer market through the creation of a clearing house for football agent payments or by establishing licensing systems, but  faces challenges to fully enforce such initiatives due to limited investigative powers and restricted jurisdiction. The legal obligations of the AML regime, which are subject to governmental monitoring and control, might help to deter actors in professional football from taking part in questionable (financial) transactions. At the very least, the obligation to adopt internal procedures and policies to ensure AML compliance, such as assessing the risks for money laundering on transactions and implementing customer due diligence procedures, will encourage discussion about who they want to work with. This drives the sector towards increased professionalism and financial integrity.  Thus, while the complexity and scale of the issues are likely to require more than the mere application of AML regulations, the Belgian and EU decisions to subject professional football to the AML regime are a welcome recognition of the need to address the illicit funds that appear to be flowing within football.


 

  1. Policymakers have extended the adaptation period from the usual three years to five, as the expected changes are so profound.

  2.  For football agents, the law will enter into force at a later point in time, as the constitutional division of powers in the Belgian federal system requires an agreement between the Belgian federal government and the Belgian regional governments (Appermont and Bull, 2023).

  3. Member States may decide to exempt professional football clubs that participate in the first division and have a total annual turnover of less than €5 million for each of the previous two calendar years. Professional football clubs that participate in lower divisions than the first division may be exempted as well, regardless of their turnover (Council of the European Union, 2024, pp. 137-138).

  4. A Clearing House (art. 14 (13) FIFA Football Agent Regulations, ed. 2023).  For football agents, the law will enter into force at a later point in time, as the constitutional division of powers in the Belgian federal system  With the aim of enhancing transparency on transactions related to football transfers, FIFA intends to process payments to football agents through its FIFrequires an agreement between the Belgian federal government and the Belgian regional governments (Appermont and Bull, 2023).A Clearing House (art. 14 (13) FIFA Football Agent Regulations, ed. 2023).

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References

Appermont, N., & Bull, W. (2023). Towards an anti-money laundering legal framework for professional football? An inductive inquiry on the basis of the Belgian case. 

Buschmann, R., & Wulzinger, M. (2018). Football leaks: Uncovering the dirty deals behind the beautiful game. Faber & Faber. 

Council of the European Union. (2024). Proposal for a regulation of the European Parliament and the Council on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing - Confirmation of the final compromise text with a view of agreement. 2021/0239 (COD). https://data.consilium.europa.eu/doc/document/ST-6220-2024-REV-1/en/pdf

De Sanctis, F. M. (2014). Football, gambling, and money laundering: A global criminal justice perspective. Springer. 

European Commission. (2007). White Paper on Sport. COM(2007) 391 Final.

Esposito, C. (2016). A red card for FIFA: Corruption and scandal in the world's foremost sports association. Richmond Journal of Global Law and Business 16(1), 45-60. 

FATF. (2009). Money laundering through the football sector. Financial Action Task Force. https://www.fatf-gafi.org/content/dam/fatf-gafi/reports/ML%20through%20the%20Football%20Sector.pdf.coredownload.pdf

Harrison, D. (2021). How a convicted criminal can buy a famous English football club. The I-Unit goes undercover to show how English football clubs can become vehicles to launder the proceeds of crime. Retrieved May 22 from https://www.ajiunit.com/article/how-a-convicted-criminal-can-buy-a-famous-english-football-club/ 

Medhi, A. (2016). Unfit, improper ownership in UK football clubs. In G. Sweeney & K. McCarthy (Eds.), Global Corruption Report: Sport (pp. 109-113). Transparency International.

Nelen, H. (2022). Ostrageous: How greed and crime erode professional football and we all look the other way. Eleven. 

Reider-Gordon, M. (2014). Money laundering, corruption, and the world cup: In the wake of Brazil 2014. Southwestern Journal of International Law, 21(1), 97-124. 

U.S. Department of Justice. (2015). Nine FIFA Officials and Five Corporate Executives Indicted for Racketeering Conspiracy and Corruption. May 27, 2015.







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