Posted on 07/10/2009 7:07:06 AM PDT by hanyfotouh
Criminals are indeed using football for money laundering and tax evasion. They increasingly use huge amounts of money transfers and frequently tend to use complex accounting to make any attempt to trace origin of the money very difficult, if not impossible.
Money laundering is a process that takes illicit or “dirty” money generated from illegal activities and puts it through a cycle of transactions so that it comes out at the end as apparently legal or “clean.” In general, the money is generated from a range of criminal activities, such as drug trafficking, murder for hire, theft, robbery, embezzlement and fraud. The process conceals the true source, ownership or use of funds.
A recent report issued by the OECD's Financial Action Task Force (FATF) revealed that football clubs are seen by criminals as an attractive money-laundering opportunity and a perfect vehicle to move illegal funds cross border. The report also shed light on human trafficking, corruption, drug trafficking and tax evasion. It highlighted more than 20 cases of money laundering after conducting a questionnaire in 25 countries.
In one case the authorities spotted an attempt to launder money through the purchase of a famous Italian football club using funds supplied by a criminal gang operating in central Italy.
Helped by globalization and lucrative television rights, the amount of money in football soared turning clubs into huge business enterprises. For example, the enormous sums paid for top players reached unexpected levels when Manchester United winger Cristiano Ronaldo signed a contract for $131.5 million to transfer to Real Madrid.
What makes criminals find football clubs an attractive mean to launder money could be attributed to the weak management of the clubs. Many clubs are run by armatures and can easily be acquired by dubious investors. Big money could move unspotted in and out and inflated agent fees and betting networks can all help criminals to mask the origin of dirty money and acquire it the legitimate appearance. This explains why suspected criminals run after clubs in financial difficulties and provide them with money to settle their debts. Furthermore, football is a way for criminals to acquire social respectability which is needed to provide criminals with cover to hide the illegal activities.
Criminals may get their washed funds back by selling the club's equipment and services at very high prices, or through sales of media rights, tickets, players and products.
One may ask if criminal associations in Egypt or the Middle East ever think of using football clubs and players as a vehicle for money laundering? There is a strong conviction that it is very unlikely. In this part of the world football does not pose the same degree of money laundering risk as opposed to Europe for several reasons;
• Generally, football clubs are run by elected boards mostly comprising respectful public figures of high integrity. The clubs' activities are adequately regulated. • Football clubs are not business enterprises where investors can buy them. • Football betting is not allowed by law.
In Egypt there are several talented professional football players playing for European clubs. The list includes Amr Zaki, Ahmed Hossam, Essam El-Hadary, Hany Ramzy among others. No one raised brows at the deals to transfer them to European football clubs. The amounts involved were too small in comparison to what was paid to top players!
In a nutshell, we may conclude that football clubs business is not an attractive conduit for money laundering in Egypt. Still, the risk cannot be totally ignored.
About The Author
Hany Abou-El-Fotouh is Director Policy & Corporate Affairs / Board Secretary, CI Capital Holding - the investment banking arm of Commercial International Bank which is the largest private bank in Egypt . He provides advice and direction to the Board and management with respect to corporate governance practices and formulates corporate policies.
Hany is a leading expert on money laundering and terrorist financing controls in the MENA region. Founder of the Middle East Compliance Officers' Forum (MECOF), he has been honored for his work in promoting compliance culture and awareness in the MENA region
Hany writes articles to different newspapers and journals on a variety of subjects. He is a public speaker and professional trainer. Previously, he worked in various senior positions in leading banks in Egypt and GCC countries like HSBC, Oman International Bank, Banque Saudi Fransi among others
Hany is a certified member of the Association of Certified Anti-Money Laundering Specialists (ACAMS) and Certified Director by Egyptian Institute of Directors
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