Sri Lanka’s sports sector, with its growing global appeal and lucrative investments, is increasingly vulnerable to the threat of money laundering (ML). From cricket’s international spotlight to emerging interest in football and basketball, Sri Lanka’s sports landscape offers vast opportunities for illicit financial activities.
As international regulatory bodies tighten their scrutiny on ML risks in sports, Sri Lanka must take proactive steps to fortify its defences and safeguard the integrity of its sports industry.
ML in sports is not a new phenomenon. The complex financial transactions that occur from sponsorship deals and player transfers to illegal betting operations can easily be manipulated by criminal syndicates to disguise the origins of illicit funds. As Sri Lanka continues to build its reputation as a regional sporting hub, the country must enhance its control mechanisms and ensure that financial criminals do not exploit its sporting events and institutions.
1. Strengthening Legal Frameworks and Regulations
One of the first steps Sri Lanka can take is further to strengthen its anti-money laundering (AML) laws as they relate to sports. While Sri Lanka has made progress with measures such as the Financial Intelligence Unit (FIU) and the Sports Ministry’s oversight committee, there is still room for improvement in addressing sports-specific risks. The country could introduce specialized regulations tailored to the unique financial flows in sports, such as regulating sponsorship contracts, player transfers and even charitable donations linked to sports events.
Additionally, Sri Lanka should consider enacting stricter penalties for individuals and organizations found to be complicit in facilitating money laundering through sports. This could serve as a deterrent for those looking to exploit the system and would send a clear message that financial crimes in the sports sector will not be tolerated.
2. Enhanced Financial Transparency in Sports
A key challenge in controlling ML in sports is the lack of transparency in financial transactions. To combat this, Sri Lanka could impose more stringent transparency requirements on its sports organizations.
By mandating public disclosure of all major sponsorship deals, player transfers, and financial arrangements over a certain threshold, the government can ensure that money trails are easier to trace.
For example, Sri Lanka could introduce a system similar to that of European football clubs, where every major financial deal, such as player sales, sponsorships, or media rights agreements, is subject to thorough vetting by financial regulatory bodies. This would reduce the opportunity for criminals to funnel illicit money through inflated contracts and transactions.
3. Improved Monitoring of Betting and Gambling Activities
Illegal betting is one of the primary ways in which money laundering occurs in sports, especially in cricket and football. As part of its effort to control money laundering, Sri Lanka should strengthen its regulation of both legal and illegal gambling activities associated with sports. The government can work to close loopholes in the betting industry by enforcing stricter controls on online and offshore betting sites, which often facilitate ML.
Establishing partnerships with global organizations such as the International Cricket Council (ICC) and the International Football Federation (FIFA) would help Sri Lanka better monitor betting patterns and identify suspicious activity in real-time. By expanding the scope of its regulatory framework, Sri Lanka can ensure that betting and gambling activities remain free from criminal exploitation.
4. Collaboration with International Financial Institutions and Law Enforcement
ML in sports often involves international networks, with illicit money moving across borders. To effectively tackle this problem, Sri Lanka must strengthen its cooperation with global financial institutions and law enforcement agencies. By sharing information and collaborating with international bodies like the Financial Action Task Force (FATF) and Interpol, Sri Lanka can improve its ability to track cross-border financial crimes linked to sports.
Sri Lanka should also consider implementing joint task forces with neighbouring countries to monitor ML activities within regional sports. This cross-border cooperation would help detect illegal money flows that could otherwise go unnoticed.
5. Investing in Education and Training for Stakeholders
Education is another critical area in the fight against money laundering in sports. Athletes, coaches, sports agents, club owners and officials must be aware of the risks posed by illicit financial activities and understand the legal and financial frameworks that govern sports transactions.
Sri Lanka should invest in widespread educational programs that train key stakeholders to spot red flags and understand the consequences of money laundering.
6. Use of Technology and Data Analytics
The use of technology and data analytics has become essential in detecting and preventing financial crime.
Sri Lanka should leverage advanced technologies to monitor financial transactions in real-time, flagging any unusual activity for further investigation. By adopting sophisticated systems that can trace money trails and track suspicious financial movements, the country can improve its ability to prevent money laundering in sports before it occurs.
7. Encouraging Whistleblower Protection and Reporting
Finally, creating an environment where whistleblowers feel safe to report suspicious activities is vital in the fight against ML. Sri Lanka should establish a clear, confidential reporting mechanism for anyone within the sports sector who suspects illicit financial activity. This could include a dedicated hotline or online platform where individuals can anonymously report concerns.
Furthermore, providing legal protections for whistleblowers would ensure that individuals who expose illegal activities are shielded from retaliation, encouraging more people to come forward and report financial misconduct.
Conclusion
As Sri Lanka’s sports industry continues to grow, the country must be proactive in addressing the risks posed by ML. Through stronger legal frameworks, enhanced transparency, international cooperation and the use of advanced technologies, Sri Lanka can mitigate the risks of financial crime in sports and safeguard the integrity of its sports sector. With these measures in place, Sri Lanka can ensure that its sporting achievements are built on a foundation of trust, fairness and accountability.
NB: The writer is Master of Anti-Money Laundering and Counter-Terrorism Financing – Charles Sturt University Australia. Master of Fraud & Financial Crimes – Charles Sturt University Australia and Telecommunication fraud investigator
