Other legislation

A look at further pieces of legislation that sports bodies need to comply with, including money laundering, corruption and whistleblowing

Category
Relevant legislation and ensuring compliance

Money laundering

Money laundering is the process of disguising the source of money obtained from serious crime or terrorism so that it appears to come from a legitimate source.

Businesses can be used for money laundering, which is a criminal offence in most countries.

In the UK, Part 7 of the Proceeds of Crime Act 2000 (POCA) sets out money laundering offences and those offences resulting from a failure to act on a suspicion of money laundering. Directors and executives should be familiar with this legislation and know what red flags to look out for, especially when people from outside the sport suddenly want to invest in it.

There is also another offence under POCA which applies to sports organisations, where an individual knows or suspects that a money-laundering investigation has begun, or is about to begin, in respect of another, and that individual makes a material disclosure to any other person which is likely to prejudice the investigation, or interferes with relevant material.

Committing any offence under POCA is extremely serious and could lead to a prison sentence. The offences are punishable by a maximum of 14 years’ imprisonment, a fine, or both for individuals including directors, managers and officers of any organisation. There are also unlimited fines for corporate entities.

Simple steps an organisation can take to prevent money laundering include:

employing a specialist outside organisation to undertake a money laundering risk assessment; and
undertaking a proportionate level of due diligence for sponsors and other commercial partners in the sport. Organisations may wish to extend that to cover those who own the clubs in their sports.

Case study: money laundering

Mr Mazhar Majeed bought semi-professional football club Croydon Athletic in 2008. He reportedly boasted of having invested vast sums of money in the club, particularly in terms of infrastructure.

In November 2011, Mr Majeed was jailed for his role in a high-profile international cricket match-fixing scandal involving the Pakistan senior national team. The matter came to light as a result of a newspaper sting operation which offered Mr Majeed a large cash payment in return for information on when no-balls would be bowled.

During this criminal investigation, it was alleged that Mr Majeed had a track record of laundering money through the club, with customs and tax officials believing ‘substantially’ more than £20 million was laundered through Croydon Athletic. Official company accounts stated that only tens of thousands of pounds had been ‘invested’ by Mr Majeed.

Mr Majeed was later sent back to prison for two years for tax evasion by deliberately under-declaring income of £259,000 from his property development and rental business.

There are three money laundering offences in POCA relating to the direct handling of the proceeds of crime, all of which require either knowledge or suspicion of money laundering. These can be committed by any person. It is an offence to:

conceal, disguise, convert or transfer the proceeds of crime,

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