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European Football Clubs Under AFC Regulation – ACAMS Today

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European Football Clubs Under AFC Regulation – ACAMS Today

It does not take an expert in football (or soccer, as it is known in some parts of the world) to recognize that the sport has a corruption problem. From the widely reported 2015 FIFA corruption scandal to the controversial awarding of the FIFA World Cup to Qatar (2022) and Saudi Arabia (2034)―the credibility of some of the key powerbrokers in football has declined in recent years.

The broader context within which the European Union (EU) decided to include football clubs in its new anti-money laundering/counter-terrorist financing (AML/CTF) regulation also includes serious allegations made against some of the world’s most successful football clubs.

Although the spotlight on financial fraud in football has been shone mostly at top European clubs, the problem of financial crime in football is much more systemic. Recent investigations conducted across the European continent have highlighted the risks connected to various teams across different national leagues and divisions, the entire player transfer market and its facilitators.

Accounting Fraud, Tax Evasion and Money Laundering

Allegations of using football clubs to launder funds have a long history across Europe. In 2018, Italian prosecutors opened an investigation into Silvio Berlusconi’s sale of AC Milan to Chinese investors. Prosecutors in Milan wanted to know if the 740 million euros ($805.8 million) paid by Chinese businessman and investor Li Yonghong to Silvio Berlusconi was deliberately overvalued.1 The investigation was reportedly triggered by three “reports of suspicious transactions” transmitted by the Bank of Italy financial intelligence unit to the Italian police.2

Possibly the largest financial scandal that shook the world of football in recent years concerns the ruling champion of England, considered by many to be currently the best football team in the world―Manchester City. In February 2023, the club was charged by the Premier League―the highest football league in England―with numerous alleged breaches of financial rules. Specifically, the club has been charged with breaking financial fair play rules around 100 times over a nine-year period between 2009 and 2018. According to the Premier League, Manchester City broke the rules mainly by providing inaccurate financial information and underreporting the financial remuneration paid to one of their managers.3 In November 2023, another Premier League club, Everton, was deducted 10 points (later reduced to six after appeal) for breach of financial rules.4

In Austria, the second division DSV Leoben is currently under federal police investigation as it is reportedly suspected of committing investment fraud and money laundering. The football club’s premises were reportedly searched by the Austrian police in December 2023, with the investigators confiscating several data storage devices.5

In Italy, the president of the country’s football federation, Gabriele Gravina, is currently being investigated for alleged embezzlement and money laundering linked to an auction of TV rights. Gravina faces accusations of illegally using money from the TV rights auction in 2018 for the purchase of real estate in Milan.6

Bayern Munich became a witness in a money laundering investigation in April 2023, when German police reportedly searched the premises of the Allianz Arena and the FC Bayern Munich office in connection to a suspected money laundering case against the Russian oligarch Alisher Usmanov.7

Questionable Investors

In November 2023, an international investigation known as Cyprus Confidential revealed that another major English football club, Chelsea FC, used secret payments from its then-owner, Roman Abramovich, to fund its activities and potentially breaching the country’s league football rules. The documents reviewed by the journalistic consortium reveal a series of payments worth tens of millions of pounds over a period of 10 years, routed through offshore vehicles belonging to Abramovich. The alleged beneficiaries include some of Chelsea’s star players and their agents. The club is currently under investigation in relation to the flow of funds from Abramovich and the entities affiliated with him between 2012 and 2019.8

In early 2022, the German edition of Business Insider reported that the then-owner of the Berlin-based football club Hertha Berlin, Lars Windhorst, might have financed some of the Berlin club’s activities with funds stemming from illegal transactions. Although he reportedly spent around 374 million euros ($407.1 million) on Hertha Berlin through his Tennor Group,9 he eventually sold the German football club for a reported 15 million euros ($16.3 million) upfront to a U.S. private equity group 777 Partners in November 2022 when he faced financial constraints across his business.10

Agents and Contracts

In early 2020, Portugal’s tax and customs authorities and the public prosecutor’s office carried out raids on several of the country’s most prominent football clubs, including Benfica, Sporting and Porto, to investigate allegations related to tax evasion and money laundering. Notably, one important subject of the investigations was Jorge Mendes, known as an agent of Cristiano Ronaldo and Jose Mourinho and considered one of the most influential football agents in the industry. Mendes’ home was reportedly searched by Portugal’s authorities.11

Around the same time, another prominent football agent, Fali Ramadani, became a subject of controversy after authorities in Italy and Spain opened investigations against him, focusing on his dealings as a football agent, including the handling of player transfers and financial transactions. The investigations have highlighted Ramadani’s alleged use of a complex corporate structure to obscure true ownership and launder millions, possibly to purchase luxury items like yachts and properties.12

Furthermore, in March 2022, the prominent German football-focused media outlet Kicker reported about a questionable player valuation practice at a Belgian professional football club, Royal Excel Mouscron. The club, owned at the time by the well-known Israeli football agent Pini Zahavi, reportedly drafted players only to resell them immediately to another club, making a hefty profit.13 One example given by Kicker is that of Marko Hanuljak, an 18-year-old who, in 2018, signed with Royal Excel Mouscron for free as his previous contract with the Croatian team Hypo Limac expired. However, Hanuljak reportedly never even arrived in Mouscron as he was immediately transferred to AC Fiorentina for 1.5 million euros ($1.6 million). This all happened without him playing a single game, after “spending” only 10 days in the Belgian club, thus raising suspicions of money laundering.14

Needed Regulation

It is undeniable that both the cultural and financial power of football is enormous. Its simplicity and accessibility make it the single most popular team sport in the world, with some sources estimating the sport to have over 3.5 billion fans. The UEFA Champions League and the FIFA World Cup are some of the most followed and profitable sporting events worldwide.

The power and impact of individual players is no less significant. With over 622 million followers, the Portuguese star footballer Cristiano Ronaldo is currently the most followed person on Instagram. His age-old rival, Lionel Messi, has over 500 million followers and is the most followed on the same platform in Argentina and South America.

The amount of money changing hands in the game―be it in form of transfer fees, investments, sponsorship deals or player salaries―are both the product of the sports’ massive commercialization over the last decades and its seemingly ever-increasing popularity demonstrated by its constant expansion into new markets.

Where transfers of large sums of money are involved, financial crime is almost unavoidable. That is why for years, expert committees, such as the supranational Financial Action Task Force, have been warning about the susceptibility of professional football to being misused for money laundering purposes.15

Similarly, in 2021, the EU police authority Europol classified professional football as particularly vulnerable to criminal money laundering transactions.16

And now, after years of negotiations, the EU has decided to include European professional football clubs in the group of obliged entities under the future EU money laundering regulation.

European Football Clubs Under the EU AML Package

According to the final draft of the regulation agreed upon by the Council of the European Union and published on February 13, 2024, professional football clubs and football agents are exposed to money laundering risks due to a list of factors inherent to the football sector, including:

  • The global popularity of football
  • The considerable sums, cash flows and large financial interests involved
  • Cross-border transactions
  • Sometimes opaque ownership structures17

Football clubs are defined as those that have been “granted a license and participate in one of the EU’s national football league(s) and whose players and staff are contractually bound and remunerated in exchange for their services.”18

So-called football agents are also within the scope of the regulation. These are natural or legal persons who get remunerated for providing intermediary services and representing football players and/or professional football clubs in negotiations with the aim of signing a contract.19 Such a person may represent players, coaches, clubs, single-entity leagues and member associations.20

The extent to which the football clubs will be exposed to AML/CTF requirements will depend on the risk identified to be linked to them as identified in the national risk assessment as well as the individual risk assessment to be conducted by each of the clubs themselves.21 See Graphic 1 below for the key elements to be considered when undertaking a risk assessment.

When football clubs implement the AML/CTF compliance program, they should have an understanding of some of the key red flags that could be an indication of money laundering, such as:22

Graphic 1: Risk assessment key elements

What is Next and How to Prepare

Football clubs can start getting prepared by undertaking a risk assessment and, based on that drafting, an AML/CTF framework that meets their specific risk categorization

The regulation foresees the possibility of exempting professional football clubs with “turnover for each of the previous two years of less than 5 million EUR [$5.4 million]” to avoid any “disproportionate burden on smaller clubs that are less exposed to risks of criminal misuse.”23 In Germany, for example, all clubs from the first and second Bundesliga, the country’s two highest football leagues, would therefore be currently classified as obliged entities.24

However, it remains unclear whether the group of obligated entities is actually limited to professional football clubs and agents or―as envisaged in the EU Parliament’s proposal―also extends to national football associations or other key players in the industry.25

What is certain is that the obliged entities will have a relatively long transition period of five years to set up money laundering compliance mechanisms, giving the industry enough time to prepare for the regulatory scrutiny ahead.

Football clubs can start to prepare by undertaking a risk assessment and, based on that drafting, an AML/CTF framework that meets their specific risk categorization. In any case, whether they are below or above the threshold, all football clubs, especially professional football clubs, should be aware of their risk exposure in relation to money laundering. Adequate customer due diligence on investors, sponsors, including advertisers, and other partners and counterparties with whom they transact will form one of the key pillars of the AML/CTF compliance program.26

Jennifer Hanley-Giersch, CAMS-Audit, managing partner, Berlin Risk Advisors GmbH,

Filip Brokes, consultant, Berlin Risk Advisors GmbH,

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