Risk Intelligence Insights

Blowing the whistle on football’s financial foul play

Che Sidanius 

Head of Financial Crime at LSEG Risk Intelligence

Football is the world’s favourite sport – and it’s also an opportunity for those who want to use its expanded international reach and complexity to cover up all kinds of financial crime. To tackle them, we need greater transparency.

  • Lack of transparency in football transfers creates opportunities for financial crimes like money laundering and human trafficking.
  • FIFA has introduced new regulations, but enforcement and transparency issues persist.
  • Improved regulatory measures and modern technology can help safeguard the sport's integrity.

The 2024 UEFA European Championship is now underway. Football fans will be transfixed by the month-long tournament, which will be hosted by Germany. Part of the appeal is the chance to see Europe’s greatest players in one tournament. This was once relatively rare; fans would have to wait for the European Championships or the World Cup, one of which is held every other year.

Between 2010 and 2019, the amount spent on player transfer fees by Europe’s top five football leagues increased from €1.5 billion to €6.6 billion. And this arguably under-regulated section, combined with the involvement of complex stakeholder networks, can create opportunities for money laundering, bribery and even human trafficking. The lack of transparency around transfers means even when fees are published, they include myriad percentages and pay-outs to individuals whose contribution to the process is murky. There are signs, however, that regulators are taking more interest.

Lack of transparency 

There are rules in place to govern transfers, the use of player agents and how payments are made, though FIFA – which governs world football – has struggled in its attempts to tighten these. Late last year, after an injunction from a German court, FIFA revised its Football Agent Regulations, which introduced exams for would-be agents and limited the commission they could receive.

Even with the new rules, clubs have little incentive to be open about transfer spending because if a selling club knows how much of the buyer’s budget remains then they may seek to drive the price up. Many transfer fees today are listed as “undisclosed”. But that lack of transparency makes it easy for dishonest actors to take money they are not entitled to or to hide it from tax authorities.

More worrying are the fake football agents who scour Africa and other parts of the developing world for talented young players, claiming that they can get them lucrative deals with European clubs. They charge the players and their families for their services, but trials with big clubs never materialise and the players are often stranded in Europe. Once again, lack of transparency is a problem – this time regarding accredited agents. Families, desperate to see their children succeed, can’t verify that these people are accredited.

Even players who are taken on by clubs can be at risk. The UN Office on Drugs and Crime said, in a 2022 report: “The residency status of foreign athletes is often linked to their sports clubs, which usually sponsor them. This makes [them] highly dependent on their employers, which in turn makes them more vulnerable to various forms of exploitation.”

Regulatory efforts

A mandatory licensing system for football agents was introduced by FIFA in 2023, requiring applicants to pass an exam. This is a positive step. Agents are also now prohibited from ‘dual representation’, where an agent might represent both the player being bought and the manager of the club buying them, a conflict of interests.

FIFA’s Guardians Programme, launched in 2019, provides a framework to help safeguard children in football. However, although this covers those working within the football industry, it does not tackle illicit actors who exploit the transfer industry for profit.

Recent years have also seen national and supranational authorities call for better protection. And in May this year, the European Parliament adopted its new package of rules to strengthen AML and counter terrorism financing (AML/CTF) protection and specifically lists professional football clubs and football agents as entities subject to this regulation.

There is more that can be done. For example, the know your customer (KYC) rules that cover financial services institutions could be applied to the transfer process to verify that agents are who the claim to be. Publishing this information online would also help families of young players to ensure their children aren’t being exploited.

With the right data, modern technology can put this information at the fingertips of those who need it, reducing financial crime and safeguarding the integrity of football as a sport. Fans who watch the Euros this summer want to know that they are watching an honest game. The very future of football depends on safeguarding its spirit of fair play.

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