1. Criminals have shown adaptability in finding new channels to launder the proceeds of their illegal activities and sports is one of the many sectors that are at risk of being inflicted with criminal money.
2. With the growing economic importance of sports during the last two decades, especially football, money gradually started to exert a strong influence on the world of sports. This influx of money has positive effects, but also negative consequences.
3. In order to get a better understanding, this study identifies vulnerabilities which make the football sector attractive to criminals. These are mainly related to the structure, the financing and the culture of this sector.
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4. The study analyses several cases that illustrate the use of the football sector as a vehicle for laundering the proceeds of criminal activities. After this analysis, money laundering (ML) through the football sector is revealed to be deeper and more complex than previously understood. Indeed, this analysis appears to show that there is more than anecdotal evidence indicating that a variety of money flows and / or financial transactions may increase the risk of ML through football. These are related to the ownership of football clubs or players, the transfer market, betting activities, image rights and sponsorship or advertising arrangements. Other cases show that the football sector is also used as a vehicle for perpetrating various other criminal activities such as trafficking in human beings, corruption, drugs trafficking (doping) and tax offences.
5. The ML techniques used vary from basic to complex techniques, including the use °leash, cross border transfers, tax havens, front companies, non-financial professionals and PEPs.
6. In many cases, connections with other well-known ML typologies were identified such as trade-based ML, the use of non-financial professionals and NPOs for ML purposes, ML through the security sector, the real estate sector and the gaming sector.
7. Various initiatives are taken by international and national actors in order to combat threats to the integrity of football, including ML. Looking ahead, there appear to be a number of areas that could be considered to improve the capacity to cope with the ML risks associated with the football sector.
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Company formation and Offshore Company Incorporation in Dubai
Money Laundering And Relation to Terrorism and Financial Crimes
8. In reaction to the increasing compliance of financial institutions all over the world with the Financial Action Task Force (FATF) anti-money laundering and counter-terrorist financing standards, criminals have shown adaptability in finding new channels to launder the proceeds of their illegal activities. Simultaneously, the globalization of financial markets and the development of information technology have gradually boosted the criminal economy and have expanded the possibilities for economic crime. In this context, there are growing concerns that various legitimate sectors are at danger of being infected with criminal money.
9. The sporting industry is one of the many sectors that could be attractive for criminals for money laundering purposes and merits closer consideration given the large scope of monetary transactions and the increase in the number of individuals involved.
10. In order to get a better understanding of the process of money laundering, of ways in which criminality can be connected with legal economic activities, and how criminal money finds its way into legitimate businesses, the FATF decided in June 2008 to study on money laundering through the football sector.
11. The following countries joined the project team and contributed to the study: Argentina, Belgium (as project co-leader), Brazil, France, Ireland (as project co-leader), Italy, the Netherlands (as project co-leader), Norway, Sweden, Switzerland and the United Kingdom. The report was written with support from the OECD sub-group on tax crimes and money laundering.
Scope
12. The aim of this project is to study one specific sport which could reveal money laundering schemes that may also be occurring in other sports. As one of the largest sports in the world, football' was chosen. Both professional and amateur football were to be examined. Although the scale of vulnerabilities to money laundering is potentially different, risks in both areas were considered likely to be similar.
13. On the other hand, the title of the project was broadened from 'clubs' to 'sector' because focussing on clubs was too narrow. Vulnerabilities not only occur within clubs but concern also other important stakeholders within the football industry. For these reasons, the original scope of the project 'money laundering through sporting clubs' consequently has turned into 'money laundering through the football sector'.
Money Laundering And World Laws
14. This report is based on four main sources: an extensive literature review, the analysis of the answers to a questionnaire sent to FATF and FSRB members; the results of a typology workshop and subsequent consultation with the football sector.
15. Results to the questionnaire 2 were obtained in October 2008 from 25 countries, mostly European, seven South-American countries, two from Asia and Australia.' The responding countries differ widely in size, role and organisation of football in society (ranging from large countries with big football leagues to smaller nations or nations with only non-professional football). Differences in information, position and interest in the person or organisation that provided the answers (national football association, government representatives, national FIUs, the police or judicial authorities) needed to be taken into consideration as well.
16. Following the analysis of questionnaires, a workshop on money laundering and the football sector was held in Monaco in November 2008 as part of the 2008 FATF/MONEYVAL Typologies meeting. This workshop was very well supported by members of the FATE*, MONEYVAL and representatives of other countries. The following participants were involved in the 2-day breakout session which considered issues in depth: Belgium, Brazil, Cyprus, Egmont Group, France, International Olympic Committee (IOC), Ireland, Italy, Monaco, Norway, Russia, Slovenia, South Africa, Switzerland, the Netherlands and the United Kingdom.
17. The study has also relied on the experience and cooperation of the private sector. A representative of the IOC attended the Monaco workshop in November 2008. Consultation with representatives of the Federation Internationale de Football Association (FIFA) and of the Union of European Football Associations (UEFA) also took place in January and April 2009. Those representatives received a copy of the report and were given the opportunity to comment. All the comments of the private sector were taken into account when considered relevant.
18. The project team would like to acknowledge the input of all the participants.
MONEY LAUNDERING and Terrorism
19. Since ancient times, societies throughout the world have devoted considerable resources to sports, as well as offering praise to the exploits of sportsmen. What is new today is the surge of commercialization of sport, the unprecedented internationalization of the sports labour market, the considerable sums of money flowing in from broadcasters and sponsors, and massive cross-border investments by sponsors, including the sporting industry itself and sometimes "super rich" private investors.
20. It is difficult to ascertain the overall economic value of sports. According to some recent estimates in Europe, the sporting industry accounts for from 0,5 to 3,7 of overall EU-GDP, depending on the definition of sporting industry! Big matches in large stadiums are undoubtedly important to local economics. In addition, sport has an important social and psychological function at all levels of the society.
21. With the growing economic and social importance of sports and increasing profits that can be made out of sports, money now exerts a strong influence on the world of sports. The influx of big money has positive effects such as an increase of sport facilities and their availability to a larger number of people, yet this money also brings negative consequences. There is a higher risk of fraud and corruption given the amount of money at stake. Sport also can be used as a channel to launder dirty money.
22. Sports governing bodies as well as national and international authorities recently expressed their concerns on the inflow of dirty money into the sporting industry. The EU White Paper on Sport — the first EU Community document to recognize the importance of sport in European society — which was published in 2007 — stated, "Sport is confronted with new threats and challenges, such as commercial pressure, exploitation of young players, doping, corruption, racism, illegal gambling, violence, money laundering and other activities detrimental to the sport ."5
Which sports?
23. Based on a literature review and the results of the FATF-questionnaire, several sports can be identified as being vulnerable to money laundering. Sports that are regularly indicated as being vulnerable.
