MONEY LAUNDERING IN FOOTBALL IN THE UNITED KINGDOM

Professional football in the United Kingdom (UK) is officially regarded as a high-risk target for money laundering.

In fact, the UK Government National Risk Assessment expressly includes professional football within its financial crime focus.

There are a number of reasons why money laundering in football is a particular problem in the UK.

More than 50% of the English Premier League football clubs have opaque and complex, offshore holding arrangements, ostensibly for tax mitigation purposes. Research from the University of Manchester shows that secrecy provisions prevent the public from tracking the real beneficial owners in many of the top clubs.

Also, many clubs, which play outside the English Premier League, are run at a loss, which makes them particularly vulnerable to unvetted, external investors offering vast sums of wealth from questionable sources.

Again, eye-watering sums flow from international player transfers, image-rights deals, and inflated agents’ fees, all of which provide a highly effective way of moving illicit money.

Furthermore, in June of this year, the UK Financial Conduct Authority, which is an independent regulatory body responsible for overseeing financial markets and services in the UK, issued an urgent warning to English Premier League clubs following discovery that several prominent teams have signed lucrative sponsorship deals with unauthorised overseas financial firms, cryptocurrency platforms, and shell companies.

As a result, the UK is fundamentally changing the way in which it regulates financial crime within football to close these loopholes, moving from the traditional system of self-regulation to statutory regulation, particularly through the Independent Football Regulator (IFR), which was set up under the recent Football Governance Act.

The IFR acts as a financial gatekeeper and enforces mandatory statutory compliance requirements, rather than relying on self-policing by the football leagues in the UK.

There are strict source-of-wealth checks, under which prospective football club owners, senior executives, and directors face extensive vetting. In particular, they must prove the legal source of their wealth and identify all pooled funding sources, such as private equity or venture capital.

In line with the European Union (EU) decision to  bring football clubs and agents into its strict Anti-Money Laundering (AML) legal regime, which is a comprehensive legislative package designed to prevent money laundering and terrorist financing throughout the EU, the cornerstone of which is the 6th Anti-Money Laundering Directive ((EU) 2024/1640) of 31 May 2024, the UK authorities are actively considering whether to make football in the UK subject to similar statutory AML Regulations.

For further information and advice, email our International Sports Law Consultant, Prof Dr Ian Blackshaw, at blackshaw@valloni.ch.