Kick Back: Cost of Sports Money Laundering is £78bn a Year, EU Says

Shocking new Brussels report highlights the growing concern about sports corruption across Europe – including fears that the lucrative football market is now a major target for criminals.

Up to £78bn annually is illegally laundered through sport, a European Union attempt to map corruption has warned.

The shocking study, Mapping of corruption of sport in the EU, found that the most common forms of illegal activity across the continent – including the UK – are match-fixing and doping.

But Europe’s failure to produce transparent systems of sports finance reporting or accounting has now created ‘fertile ground’ for activities such as money laundering and tax evasion, the review, overseen by consultants Ecorys, concludes.

France (16 cases), Britain (15), Bulgaria (14) and Italy (10) accounted for the highest levels of betting-related match-fixing incidents since 2010.

Over the past few years, Brussels has become increasingly worried about sophisticated methods that criminal gangs now employ to launder money through sports clubs, wages, facilities or activities – with cash-rich football now a major concern.

Accounting Tricks

One common trick now used by criminal gangs is to take over, or act as a partner to, a club and to run illegally-obtained monies through the books, eventually declaring it as profits on activities such as player transfers – thereby “cleaning” or legitimising the cash.

Judicial bodies in Italy are currently investigating the financial accounts of Series A giants AC Milan, amid concerns over alleged money laundering. The club has changed owners twice in recent years. AC Milan denies any wrongdoing.

As Byline Times recently reported, Her Majesty’s Revenue and Customs department is also still investigating a case of potential money laundering linked to a British professional football club. The Financial Action Task Force investigated the prevalence of money laundering in football in 2009 and identified more than 20 cases. But fears have grown that the activity may have become more widespread.

As Byline Times recently reported, Her Majesty’s Revenue and Customs department is also still investigating a case of potential money laundering linked to a British professional football club.

In recent years, judicial authorities in Spain and Portugal – supported by investigators at Europol – have broken up two Russian-led groups suspected of laundering money through football clubs.

But tax evasion by sports clubs or bodies is now equally a concern within Brussels. Judicial and tax authorities have found numerous examples of the generation of unreported profit or exaggeration in the reporting of expenses without making the payments declared.

Tax Evasion in Sports

The EU estimates that £14.5bn a year is lost to tax authorities globally due to tax evasion in sports – but the report states that the figures are hard to estimate because of the increasing use of offshore finance, cross border transfers and third-party arrangements.

The report states that corruption in European sport is now viewed as widespread – ranging from organised crime at major events to low-level events at local clubs. Contrary to past beliefs, the study concludes there is a ‘relatively high concentration of corruption issues in Europe compared to the rest of the world’.

According to the report, Europe is home to the highest recorded levels of match-fixing and doping. Europe’s giant football market has been the biggest target of the continent’s match-fixing cases in recent years – accounting for 70% of cases between 2000 and 2010.

France (16 cases), Britain (15), Bulgaria (14) and Italy (10) accounted for the highest levels of betting-related match-fixing incidents since 2010.

Match-Fixing Deterrent

But the study is not all doom and gloom. Methods employed to tackle the most common form of sports corruption, match-fixing, have had a positive impact in some countries, it states.

In particular, the EU study suggests that a new system of fines for match-fixing has acted as an effective deterrent in some EU member states – including some states where there had been ‘a particularly high prevalence’ of match-fixing.

Some preventative measures, such as awareness-raising initiatives and the promotion of ‘good governance’ practices, have also helped to tackle problems.

But the study concludes there is still scope for greater use of ‘multi-stakeholder groups’ – including judicial bodies, government departments and national sports agencies – to work closer together to tackle complex challenges such as money laundering.

The authors also suggest the EU itself could play a co-ordinating role – helping to bring national authorities together to develop continent-wide systems to identify and tackle corruption.