Football needs tough anti-money laundering rules

With the summer ending, football all over Europe is in full swing. The highest player transfer dealings in history have closed and this week the group stage of the UEFA Champions League, one of the world’s richest football competitions, has just kicked off. Yet transparency remains weak in this increasingly rich sector and as a result, corruption risks arise.

Football clubs with large debts can be attractive targets for criminals seeking to launder their dishonest income, not least in the United Kingdom where anti-money laundering regulation are not applied to football. This makes it easier for criminals to outflank the systems of the football business and end up owning clubs.

The most egregious problem is secrecy. Criminals can simply hide their identity behind shell companies and present themselves as white knights to vulnerable clubs, even though the money comes from criminal activity.

In a shell company the real source of the money and its owner is not stated. This, unfortunately, is legal.

The key strategy football authorities currently use in the UK to protect clubs is the ‘fit and proper person test’, but this falls short of identifying the criminal sources of wealth.

There are three such tests, one operated by the Premier League (known as the owners’ and directors’ test), a second by the Football League for their respective leagues, and the third by the Football Association (FA).

The tests seek to prevent anyone who holds a criminal record from owning or directing a club, protect clubs from people who do not share the long-term business interests of the club, and prevent anyone who lacks integrity from becoming an owner or director. This rules out people who have current criminal convictions for fraud or dishonesty, are legally bankrupt, have been declared unfit to act as a director of a UK-registered company, or have breached UK rules on betting, for example.

However, these tests are not enough. None require checks on spent convictions beyond the UK, and each permit disqualified directors to purchase a club if they are not named in the paperwork. This is something that is possible if they use a shell company where proxies rather than the beneficial owner of the companies are listed as the purchasers.

The tests also do not require cross-checks on owners or directors against any international data-sharing schemes and international media reports that could show that they would fail the fit and proper persons test in other countries.

For example, Vladimir Antonov was allowed to buy Portsmouth FC when he was not allowed even to operate his financial services business in the UK. And the former Thai prime minister Thaksin Shinawatra was cleared to purchase Manchester City FC in 2007 despite having been ousted in a military coup following allegations of corruption and human rights violations. (He was later charged with corruption and his assets, estimated at about £800 million (around US$1.2 billion) were frozen).

The irony is that the UK has stronger money-laundering regulations than many other countries and, as a result, organised criminals are often deterred from laundering their wealth through the country’s banking sector (though property is another issue). To stop money laundering through football, many of the features of the financial sector’s regime can and should be extended to football.

The article here sets out how this can be done in order to protect UK football from the type of improper ownership to which it is already at serious risk.