In the 2021/2022 season, the 10 leading football clubs in the European Union (i.e., excluding clubs in the English Premier League) generated a combined revenue that exceeded €4.5 billion. At the same time, the soccer leagues in France, Germany, Italy, and Spain, recorded a total revenue of €10.9 billion.
Given these figures, it is understandable that the EU has begun extending its anti-money laundering (AML) and counter-terrorism financing (CTF) measures to incorporate high-level professional soccer clubs, sports agents in the industry, and professional associations.
The move to introduce AML laws to European football comes in the wake of corruption scandals that have plagued the sport and it recognizes the potential for the industry to be used as an avenue for laundering money.
Professional football has also been a vehicle for kleptocratic wealth, and there have been instances of oligarchs being compelled to sell their interests in a club following government sanctions.
The EU’s new AML package will require professional soccer clubs, agents, and European football associations to assess money laundering risks and implement mitigating procedures, which includes initial due diligence and ongoing monitoring, as well as reporting suspicious transactions.
This EU regulation has a five-year implementation period, and it remains to be seen how effective it will be in curbing money laundering in the soccer industry. A focus on identifying beneficial owners and ultimate beneficial ownership, and a focus on ownership vs control in AML and sanctions screening are likely to be key to the success of this new AML framework for the industry.
The UK is home to the richest and most-watched soccer football league in the world; however, it is yet to follow the EU's lead in implementing AML regulations for the industry. The country is considering the introduction of a new independent regulator to ensure clubs comply with financial regulations.
Despite these attempts to change, the enforcement of AML regulations in the sport is seen as a challenging task due to the vast amounts of money involved and under-resourced enforcement agencies.
As criminals and sanctioned individuals continue to seek ways to launder money, new AML laws will continue to transform and change scope. AML programs have been seen in, for example, the art and luxury goods markets, which have been engaged in AML control frameworks.
With the regulation targeting professional soccer, the onus falls to newly obliged entities to adopt best practices at pace. Looking to data and solution providers to effectively support them through a learning curve in a short period of time can help adopt a new control framework and demonstrate commitment to the new laws that will govern the game.
So how should any newly obliged entities, such as those in the soccer industry, prepare so they can adapt to meet compliance requirements?
A good place to start would be with the lessons learnt from financial institutions and other regulated entities to see what can be transferred through their tried and tested methods.
Moody’s can work with an obliged entity to develop an AML due diligence and risk monitoring framework that’s tailored for them. We can help establish an entity verification process, including identity verification for ultimate beneficial owners (UBO), across any customer or third party network.
We can also help scope and adapt onboarding and intelligent screening processes that are “always on” meaning if a new risk emerges – e.g., someone becomes sanctioned – this is flagged in real time.
Automated data checks create a picture of risk so decisions can be made with confidence about who to work with.
Aligning screening technology to a risk policy and risk appetite helps uncover vulnerabilities, so they can be addressed quickly. And digitally transforming risk policies enables compliance with AML regulations in different regions and jurisdictions.
For more information on how Moody’s can help you establish and automate an AML and CTF framework for your organization, please get in touch – we would love to help.
Please get in touch if you would like to discuss Moody's Anti Money Laundering solutions - we would love to hear from you.