Banks call for more transparency from football clubs
8 October 2019 - 4 min Reading time
Febelfin response regarding banking services to football clubs
The VRT news department reported today that certain football clubs - mainly those with foreign ownership - are facing difficulties in opening bank accounts. What's going on?
- Belgian banks are exercising increased vigilance towards professional football clubs due to money laundering risks.
- They are doing this, among other things, in response to a report from the European Commission on the evolution of money laundering risks in Europe, which identifies professional football clubs as a risk sector.
- Anti-money laundering policies have been tightened and enforced for several years.
- Anti-money laundering regulations require banks to know the origin of financial transactions. Therefore, it is up to the football clubs to bring transparency regarding the origin of their transactions and financial flows. If they cannot do so, banks may be forced to terminate certain relationships. Banks will always conduct a thorough risk analysis
- Febelfin advocates for decisive measures in Belgian and international football to combat money laundering and fraud, and to embrace good practices. The banking sector is, of course, willing to explore how we can help solve these problems. .
Banks request transparency from professional football clubs
Since last summer, Belgian banks, like their counterparts across Europe, have been reviewing their relationships with football clubs. The reason for this is an annual report issued by the European Commission on the evolution of money laundering risks in Europe. This report serves as a guideline that banks must consider in their anti-money laundering policies.
European Commission, Report on the assessment of the risk of money laundering and terrorist financing affecting the internal market and relating to cross-border activities
For some time now, professional football clubs have been identified in this report as a high-risk sector. The European Commission highlights the following: "The complex organization of professional football and the lack of transparency have created a fertile ground for the use of illegal means. Dubious amounts without clear or explainable financial returns or profits are invested in sports.
The problem has been known for a while. As early as 2009 , international organizations such as the Financial Action Task Force warned about the risks posed by the football sector in terms of money laundering and illegal activities.
The problem has been known for some time. As early as 2009, international organizations such as the Financial Action Task Force warned about the risks posed by the football sector in terms of money laundering and illegal practices.
Banks are obligated to analyze such reports and take them into account in their anti-money laundering policies. If a football club cannot precisely explain the source of its funds or if there are indications that certain capital flows may originate from illegal activities, then the bank may not accept those funds, and the bank is required to report this to the Anti-Money Laundering Unit. Sometimes, a bank may find it necessary to terminate its relationship with a football club, as failure to do so could expose the bank to the risk of facilitating money laundering. However, the bank must proceed with caution and conduct a thorough risk analysis.
Banks that do not handle this carefully expose themselves to heavy fines that can amount to up to 10% of their global turnover, as well as criminal convictions. This has been enforced in several recent cases (e.g., ING Netherlands, Danske Bank, ...). Banks cannot afford to make mistakes in this regard.
Febelfin calls for decisive measures
As a sector, we do not have a concrete view of the extent of the issues being reported. The banking sector is, of course, willing to explore how we can help address these problems. However, federations and clubs will also need to make serious efforts to demonstrate that they take sound business practices seriously. There is a need for greater awareness, more exchange of best practices, the tightening of procedures, and better support from the federations. Otherwise, the entire football sector may fall victim to this.
