By Wayne Haynes, 12 August 2024
A new domestic football season is nearly upon us, heralded as is customary by a rush of transfer activity and the rising hopes and expectations of supporters everywhere that this will be their year.
But the pre-season talk has also been dominated in the UK by events off the field, with the long-awaited independent football regulator (IFR) set to be established. The new Labour government confirmed in the King’s Speech that it intended to pick up where the previous government left off by introducing the Football Governance Bill, the main thrust of which is committed to establishing an IFR. The goal is to provide this new regulator with a number of powers to oversee and improve the governance of football in England and Wales.
Set against the backdrop of the proposed IFR is the unstoppable globalisation and growth of football and the subsequent increase in its exposure to criminal money to which this has given rise. The IFR is seen by many as a realistic means of preventing this criminal money from entering the game, and as a welcome addition to the regulatory system.
In 2009, FATF identified that the methods and tactics being utilised by bad actors in football are identical to those normally employed by drug cartels:
....techniques used vary from basic to complex techniques, including the use of cash, cross border transfers, tax havens, front companies, non-financial professionals and PEPs.[1]
This brings into stark focus one of the huge tasks facing the IFR, a task that is exacerbated by the fact that the Premier League is the largest revenue generator within the international football market. Clearly, the IFR is going to need some help.
Thankfully financial sector regulatory bodies have been leading the fight against bad actors and criminal money for decades and can offer a wide range of options that the IFR can call upon.
Here are some areas that should be the immediate focus of the fledgling regulator.
Regulatory frameworks
The development of comprehensive legal frameworks that set clear standards and guidelines for operations of clubs and connected entities – including reliable financial reporting, countermeasures to tackle financial crime and implementation of a risk-based approach – should be a priority for the IFR, as these are the bedrock of the financial regulator. These areas should be strongly supported by robust monitoring and reporting processes that include whistleblowing capabilities, recognised as a key source of intelligence throughout the financial sector.
Stakeholders
A key difference between the IFR and the financial sector is the involvement of stakeholders. Football clubs, fans and staff, as well as sponsors and local government bodies, will have a more proactive input and interested viewpoint that will support what the IFR is looking to do, in terms of improving the overall governance of football. Developing and maintaining a solid relationship with these stakeholders is crucial for regulatory success, both in terms of listening to their concerns and taking action upon them; a relationship that most financial regulators would dearly love to attain.
Beneficial owners and source of funds
Ascertaining who the true beneficial owner is behind a business or where the source of the funds has originated are some of the more problematic areas for the financial services professional. These areas will undoubtedly create similar obstacles for the IFR; nevertheless it will have less confidentiality and litigation fears to consider, meaning it can approach these problems in a different way, such as through the use of investigative journalism and wider open-source research.
Other important subject areas that will assist in establishing the IFR as a force to be reckoned with include the capability to issue and enforce appropriate sanctions. Ensuring that all who fall under the regulatory eye of the IFR are fully aware of why they are there is important, which leads to another vital area of implementation: education at all relevant levels. From the fan on the terrace all the way through to the shareholders, distant directors and worldwide sponsors, the IFR messaging needs to be clear and unequivocal as to what its aims are, which again should be received in a more generous and open manner than that of other regulated sectors.
Many sporting bodies across the globe, along with some organised criminal groups, will be watching the development of the IFR with interest. Those of us who are part of the football fraternity should do what is expected of every true supporter: support it.