With money laundering red flags going up, football clubs may have to step up

A Europol report on money laundering recently identified football as a money laundering paradise for organised crime networks

Football clubs will have to step up internal controls amid growing attention to criminal activity in sports by anti-money laundering agencies.

The Malta Football Association is working on a framework to introduce more accountability and corporate oversight in top-tier clubs, a source close to the governing football body told MaltaToday.

Football was identified recently in a Europol report as a money laundering paradise for organised crime networks. In its more sophisticated form, criminals take possession of clubs through generous sponsorships and eventual ownership.

And Malta’s football scene, small as it may be, is also at risk of criminal activity that seeks to launder dirty money through the popular sport.

“Clubs, like NGOs, are very often flimsy organisations that are vulnerable. They are also organisations where professionalism mixes with passion and voluntary work, which makes it harder to zoom in on wrongdoing,” sources in law enforcement who shared their thoughts with this newspaper suggested.

Only last year, professional football was identified for the first time as a risk sector alongside investor citizenship schemes and freeports, in the EU’s supranational risk assessment on money laundering and terrorist financing.

The EU report put its finger on the difficulty that law enforcement agencies face when dealing with criminal activity in the sports realm

“As in the art world, criminals in the sports world are not always motivated by economic gain. Social prestige, appearing with celebrities, and the prospect of dealing with authority figures may also attract private investors with dubious intentions,” the report noted.

This may ring true for some football administrators in Malta that have poured large sums of money in new signings and the payment of good wages to players with little apparent income to sustain the operation.

Sifting the wheat from the chaff is not easy and even where the red flags go up, clamping down will always entail extensive intelligence gathering.

The EU report argued that certain obligations should be established, such as requiring clubs, federations, and confederations, including those who provide advisory, auditing, bookkeeping, and consulting services in this area, to communicate suspicious transactions to the respective national financial intelligence units.

Sources close to the football scene in Malta said the matter was of concern, which is why the MFA is working on a framework to help clubs create corporate structures with checks and balances to try and ward off criminal activity or identify it.

Football most targeted

Football is the most targeted and manipulated sport by international organised crime groups because if its worldwide popularity, financial dimension and large turn-over betting market attached to it. The size of the global betting market is estimated at €1.7 trillion, with football on its own accounting for €895 million.

Europol warned that South-East Asian, and particularly Chinese, networks were trying to acquire smaller football clubs in financial difficulty for the purpose of sport manipulation.

“Individuals and companies are involved in taking control, or attempting to do so, of EU football clubs for the purpose of betting-related match-fixing. Details of the concrete involvement of Chinese organised crime groups operating in or having an impact on the EU in sports corruption remain a major intelligence gap,” Europol said.

Buying or sponsoring clubs

Europol said the more ‘professional’ method used by certain crime groups was to buy a club, or sponsor it to an extent of gaining effective control over the team.

The targeted club is bought for the sole purpose of fixing matches and to launder money. “High illegal gains are secured through the execution of an extended series of manipulated matches for betting purposes,” Europol said.

This is a growing trend especially in football, where clubs of lower divisions, sometimes beset by heavy financial problems, are taken over by foreign individuals and companies.

Europol said that it is commonly observed that the new investors of a club will transfer specifically selected foreign players in the targeted teams and use them to execute match-fixing schemes.