Football, Gambling and Money Laundering

Football, Gambling and Money Laundering

Since ancient times, man has glorified athletes for their importance and for the beauty of their practice. The vast commercialization of sport in modern times, with its internationalized labor market and huge investments by media and sponsors, would have been unthinkable in previous eras. The existence of large sums of money with wealthy private investors who cross borders to fund sports would have been unimaginable.

The romantic view of sport has dissipated and no longer finds support or justification in today’s world. Crime that was typically confined to certain sectors found its way into sport, transforming itself in order to carry out offenses that are extremely harmful to society.

Recognizing the opportunity for huge profits, money gradually discovered the world of sport and began to control it. On one hand, the increase in cash flow has allowed large numbers of people to access the world of sport through various investments. On the other hand, it has led to the harmful effects of fraud, tax evasion, corruption, doping, human trafficking, illegal gambling, match fixing, and money laundering. There is no doubt, therefore, about sport’s vulnerability to a number of global threats.

It was not by accident that money laundering took such an unusual turn. Controls enacted pursuant to the recommendations by the Financial Action Task Force (FATF), aimed at cracking down on money laundering, made it necessary for criminals to seek out new mechanisms for the laundering of ill-gotten gains. Furthermore, the globalization of financial markets and the rapid development of information technology have gradually steered the underworld economy toward new possibilities for the commission of financial crimes.

Like so many other businesses, sport and gambling have been used by criminals to launder money and derive illegal income. As in the art world, criminals in the sport world are not always motivated by monetary gain. Social prestige, rubbing elbows with celebrities, and the prospect of dealing with authority figures may also attract private investors bent on skirting the law. Its high degree of specialization— inasmuch as few are really familiar with this market—could also contribute toward attracting illegal activities.

The absence of adequate and well-designed legislation gives power and mobility to organized crime, allowing its continuity and illegal acquisition of unprecedented amounts of wealth. Unreasonable, unjustified, and repeated tolerance by authorities toward criminal activities “practiced in the name of sport” has undermined the credibility of the sport industry. The inertia and inefficiency that plague enforcement in this industry must be dealt with through an assessment of sport regulation. Taking isolated and uncoordinated positions is irrational and runs serious risks. It is now more than ever necessary to use legal tools to bring an end to organized crime.

Because it is one of the most popular and celebrated sports in the world, and is also the subject of much attention and concern from many authorities, football will receive special attention and consideration in this book. Football is played by more than 265 million people in the world. According to the Fédération Internationale de Football Association (FIFA), there are 38 million professional players, duly registered, and about 301,000 clubs. Football has experienced an extraordinary growth since the early 1990s, a result of increased television rights and sponsorships. The market for professional players has experienced an unprecedented internationalization, allowing more and more transfers of resources at a transcontinental level.

The high volume of resources crossing boundaries and the lack of transparency in these transactions should demand a more incisive control by authorities, whose absence or ineffectiveness provides a unique opportunity for criminals to launder money. Yet, there is a true and apparent conflict. On one hand, there is a desire for autonomy in the organization and operation of sport. In Brazil, this autonomy is subject to a requirement of exhaustion in disciplinary and competition matters by a government judicial body called Sport Justice (Justiça Desportiva). On the other hand, there is an imperative need for state action in the prosecution of offenses committed by criminal organizations that rely on sport to perpetuate their actions and gain profit.

In football, image contracts, advertising contracts, and sponsorship contracts can be tools for criminal practice, notably tax evasion, since the money stipulated in these contracts is commonly transferred to accounts of companies in tax havens. This results in serious risks of fraud, since it is tempting to not declare the money received, which requires the use of third parties in various financial transactions. The most common form of cash payments involves jurisdictions located abroad, which allow the final destination of payments to be disguised. Image rights are also used to conceal the amounts actually paid to players.

Gambling, like sport, has a recreational role in society. Sport and gambling are similar in the sense that both are vulnerable to money laundering due to the lack of transparency and the attraction of large sums of money that characterize the two sectors. In addition, gambling is directly related to sport through betting on games and matches.

Therefore, lotteries, casinos, and gambling houses will also receive special attention in this book. The economic impact of the gambling sector is evident because large investments are channeled through it. There are also societal impacts, including business development and an extensive transmission of cultural values. Yet, the growth of this industry has encountered illegal practices, especially corruption, tax evasion, and money laundering.

The author’s purpose in this book is to go beyond a mere introduction to this captivating topic. Considerations will be presented in an effort to further the study of methods likely to add transparency to business dealings and thereby inhibit or curtail unlawful activities. This book seeks to dispel the many mysteries surrounding certain practices. It will provide an understanding of the deficiencies in the world of football, as well as the weaknesses present in lotteries, casinos, and gambling houses. The aim is therefore to shed light on commercial practices in the world of sport in order to improve the system of crime prevention and punishment.

Some statutes and legislation deserve special analysis, as does the role of oversight bodies and regulators (FIFA, confederations or federations, clubs, and government agencies). The book will also identify legislative and institutional loopholes that might give power and mobility to organized crime, thereby making it a more deeply entrenched source of unprecedented illicit wealth.

The issue of violence in sport will also be addressed, for the crimes committed in the sport world are not limited to economic and financial ones. Sport provokes strong feelings in people that sometimes result in rash action. The emotional aspects of sport can, in a way, explain why people sometimes do not view it seriously in terms of its management and funding. In other words, authorities do not prioritize investigating financial crime in sport.

Betting on games has developed a sort of sophistication, with numerous operators working in several countries and using the Internet. This has increased the risk of illegal money laundering. Therefore, countries must regulate the gaming market so as to make it transparent because profiteers use countries that do not regulate or supervise games. It is not easy to control speculators who use online services and work from abroad. This, combined with the lack of transparency in the market, makes it an ever more attractive vehicle for criminals.

It is important to note that FIFA, the world governing body of football, which also has the mission of regulation, promotion, and development throughout the world, has made efforts to prevent unlawful practices in football. National associations, federations, and confederations are also properly engaged in these efforts. They should do more to offer necessary support, like professional training on money laundering, so as to enable communication on suspicious transactions. They should also analyze regulations and disciplinary actions of those in charge of managing and protecting sport.

The FATF, an intergovernmental body linked to the Organization for Economic Cooperation and Development, has shown great concern in the prevention of money laundering in sport.

For a global vision of the role of each actor in the football industry, it is important to study, among others, the Brazilian bodies of discipline and control, including the Brazilian Football Confederation, regional federations, clubs, the Council for Financial Activities Control (Brazil’s financial intelligence unit), the Federal Revenue of Brazil, police, public prosecutors, and the Sport Ministry. They could all, in theory, coordinate actions to prevent crime.

After connecting the dots that make up this interesting topic, the book suggests effective proposals for improving the assessment, investigation, and prosecution of the crime of money laundering. The book takes into account both the legislation and the immediate needs of the bodies involved, judicial or otherwise. The world is in a pivotal moment. Brazil, one of the greatest powers in football, is especially in a critical time, as it will soon host both the World Cup and the Olympics.

Gambling and sport have demanded staunch fair play to prohibit common violence. But it is also essential that they develop “financial fair play” to curb economic and financial crimes that can, in the not so distant future, compromise and bring down the activity itself. This book can assist global authorities in taking necessary preventive measures.

We must be mindful that one of the essential criminological features inherent in money laundering, as Pedro Caeiro, citing Jorge Fernandes Godinho and Luís Goes Pinheiro, reminds us, is its necessary links to organized crime, which in turn add considerable diversity to the types of conduct that its prosecution and enforcement may prevent.

Our aim is to provide a reading on this sector, a snapshot of the market, which will provide the groundwork and guidance necessary to give it transparency and a backdrop sufficient for a particularized analysis. Some rigor in procedures for cataloging and investigation are in order, for we ought to remember that the resurgence of organized crime is often the result of a systemic atmosphere of inattention, mutual tolerance, and ethical codes that, however lofty, are in practice applied only selectively. Matters are worsened by the arrogance and permissiveness, if not covert complicity, of portions of civil society (the elite, the press, etc.) that insist on pointing out only the defects that do not suit their purposes.

This book is divided into nine chapters. Chapter 2 addresses illegal activities in the sport world. Chapter 3 deals specifically with financial crime in football. It also provides an overview of the French experience of controlling accounts in football. Chapter 4 discusses overarching topics of gambling and lotteries, measures for crime prevention, and enforcement agencies. Chapter 5 is about illegal betting. Here, important cases that were recently covered by the media will be discussed. Chapter 6 seeks to identify the use of illegal and disguised instruments for payments in business transactions. Forms of payment and the use of nongovernmental and offshore organizations are addressed. International legal cooperation and asset forfeiture are analyzed in Chapter 7. Chapter 8 covers conclusions that may go a long way toward clarifying how the prevention of money laundering applies to the gambling and sport industries. The final chapter, Chapter 9, covers national and international proposals for improving the industry so as to prevent money laundering and the financing of terrorism.


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