Money Laundering through Sports is rampant

Money laundering through sports is getting out of control day by day. Criminals are increasingly using football for money laundering and tax evasion. It helped  the globalisation of the sport and financial needs of clubs, an anti-corruption body said today.

The world’s most popular sport is attracting criminals with its huge cross-border money transfers. It often obscure accounting methods, a unit of the Organisation for Economic Cooperation and Development said.

Laundering through Football

“Football clubs are indeed seen by criminals as the perfect vehicles for money laundering,” the OECD’s Financial Action Task Force said.

While other sports such as cricket, rugby, horse racing or motor racing were also under threat. Football was “an obvious candidate to examine money laundering through sport”. As it dwarfed all the others in its global scale.

For instance, in one case, the report said, investigators thwarted an attempt to launder money. Through the purchase of a famous Italian club. Criminal association operating in Central Italy supplied funds.

“Proceedings for money laundering, insider trading, extortion, unfair competition and other offences are ongoing,” it said, without naming the club.

Based on 20 cases of money laundering in football, the report concluded that the structure, financing and culture of the sport are all conducive to financial crimes. It cited two examples of tax evasion involving players in Britain. The one linked to image rights and the other to a signing-on fee that was hidden from tax authorities.

In addition, boosted by lucrative television rights, the amount of money in the game has exploded, turning venerable clubs into massive business enterprises. The heady sums paid for top players reached new heights last month when Manchester United winger Cristiano Ronaldo completed a record £80m transfer to Real Madrid.

Laundering through Sports

Massive money flows that move in and out of tax havens, huge and irrational transfer payments, inflated agent fees and betting networks can all help criminals trying to pass off their illicit gains as legal.

The sport’s image also plays a role. Clubs are less likely to report money laundering for fear of losing sponsors. While the criminals may use ownership of a club to forge legal business ties and win lucrative construction contracts.

Therefore, the suspected criminals should fund the deficit of the report cities.Investors may get their “laundered” funds back by selling the club’s equipment and services at inflated prices. Or via sales of media rights, tickets, players and merchandise.

Global transfers of young football players can also attract human traffickers, the report said. The task force recommends building better awareness and improving governance and financial transparency.