13 March ~ Football's international transfer market "has basically been a jungle" according to Mark Goddard, head of FIFA's anti-corruption programme, with large sums of money crossing national boundaries with little oversight or regulation. The sheer scale of the market gives an insight into the difficulties it poses to regulators, with estimates putting the annual number of transactions as somewhere between 20,000-30,000 with a value of around £650 million. An OECD report last year saw the market as being open to money laundering, tax evasion and insider fraud.
Goddard is a leading part of FIFA's response with the introduction of a new web-based system for registering transfers – the Transfer Matching System (TMS). He accepts the project is "no silver bullet". Essentially, all the details of a transfer are entered onto the TMS website by the buying and selling clubs – contracts, player IDs, all fees, payments to agents and verifiable proof of payment – and when the details match the transfer is approved. The new system will become mandatory from October 1 this year, with 144 of the 208 national associations already signed up.
So far so good. Like any system of this kind it depends on the clubs' entering accurate data and FIFA are threatening severe penalties – fines, exclusions from competitions and transfer bans – for clubs and officials that do not operate the system correctly. This fits in with the governing body's overall approach to regulating the market by putting responsibility on to clubs and their officials, rather than trying to control agents. FIFA has estimated that only one in five transfers involve a registered agent, leaving the unregistered agents beyond their control.
The hope is that the new system will improve transparency and limit the opportunities for money laundering and third party ownership. One of the favourite stories told by FIFA officials involved in the project is about a football director from a Central American country who expressed surprise that he would need a bank account to sell players abroad – stuffing money into a steel box had served him well up to that point. Goddard said that it has been common for "transfers" to take place involving fictitious players. At the heart of the money laundering problem are two issues – the difficulty of deciding the true value of players, linked to the complexity of payments contained in contracts, and the regular use of opaque, off-shore ownership structures that make it difficult to establish where funds come from, and where they go to. The OECD has likened the practice of inflating player values to the common money laundering practice of over-invoicing for goods.
The same report describes a case in Argentina, where an indebted club struck a deal with an investment fund, based in a tax haven. The fund agreed to pay off the club's debts and funded the purchase of a player from outside Argentina, with all payments for the transfer routed through banks in a third country. None of the money entered Argentina, the deal was beyond the remit of either national federation and it was not possible to determine the source or eventual destination of any of the money involved.
Taking control of third party ownership of players, which is very common in South America, will rely in part on the honesty of clubs in declaring that no other participant is involved in the deal. Another more useful idea is that transfers will be signed off only if the deal, and payment, is club to club. If TMS can play a part in keeping money circulating around within football then, unexpectedly, something as tedious as the introduction of a computer system might be a cause for celebration. Stranger things have happened. Brian Simpson