How FIFA TMS investigations increase transparency and accountability in international football transfers

Published 13 June 2016 | Authored by: Kimberly Morris, Barry Lysaght

With the UEFA European Championships, Copa America Centenario and the Olympic Games Rio 2016 all taking place this summer, fans certainly have a veritable feast of football to look forward to in 2016.

As well as spoiling spectators for choice, these international tournaments also represent a valuable opportunity for players to put themselves in the proverbial shop window for clubs scouting out new recruits. Indeed, the ‘tournament effect’ on the transfer market is a live phenomenon, with FIFA TMS’s Global Transfer Market 2015 reporting1 an 18% increase in the number of transfers of players whose countries had reached the quarter finals of the FIFA World Cup 2014 in Brazil. Furthermore, transfer fees jumped by 27% in the wake of the competition when compared with the same period in the previous year. Tournaments, then, are a catalyst for transfers and increased spending on transfer fees.

However, this spike in financial activity brings with it a heightened focus on compliance with the rules governing the international transfer market. As FIFA is the global regulator of the international transfer market, all international transfers of players must adhere to transfer ‘laws’ set out in the FIFA Regulations on the Status and Transfer of Players (“RSTP”).2 The task of ensuring that the 211 member associations and over 7,000 clubs who engage in the transfer of professional players around the globe follow these laws is the role of both FIFA TMS Integrity and Compliance department (“I&C”) as well as the FIFA Disciplinary Committee (“FIFA DisCo”). With over 14,000 transfers of professional players completed each year, I&C is primarily responsible for ensuring that all clubs and associations act in a transparent and accountable manner throughout the transfer process. The goal is to ensure fairness and a level playing field based on integrity and accountability.

 

Background to FIFA TMS

International transfers of professional footballers are processed through the FIFA International Transfer Matching System (ITMS) in accordance with the RSTP – a ground-breaking technological and regulatory development which has revolutionised how such transfers are done.

In 2007, the 57th FIFA congress voted to create the ITMS online system for male 11 a-side international football transfers as one of the recommendations of the FIFA task force ‘For the Good of the Game.’ The objectives were to increase integrity and transparency in the market by increasing data available to football authorities on every transaction and to enforce rules on the protection of minors. In October 2010, the regulations relating to use of ITMS were included in Annexe 3 of the RSTP, making ITMS a mandatory step for all international transfers of professional male footballers through a secure, online and real-time system.

Aside from setting out the obligations and procedures governing the international transfer process, annexe 3 also recognises the delegated authority given to FIFA TMS by the FIFA DisCo to investigate, gather evidence and impose sanctions against non-compliant stakeholders. In addition to the delegated authority given by FIFA DisCo (as described in point 4 herein), Article 7.4 of annexe 3 states that FIFA TMS shall investigate matters in relation to international transfers and that “All parties are obliged to collaborate to establish the facts”.

This ‘collaboration’ is wide-ranging and includes compliance, on reasonable notice, with “requests for any documents, information or any other material of any nature held by the parties” as well as any such material which is “not held by the parties but which the parties are entitled to obtain”. As FIFA TMS also “helps safeguard the protection of minors” (Article 1.3, Annexe 3), I&C’s investigative remit is given even broader scope by Article 4.4 of Annexe 2, which requires stakeholders to collaborate with FIFA TMS requests for material concerning the international transfer of minors. As a consequence, I&C investigates issues concerning the international transfers of all male professional players aged 18 and over, as well as all players under the age of 18 – male and female, amateur and professional.

 

Sources and intelligence

I&C has a broad variety of sources to draw upon when it comes to gathering information about possible breaches of the RSTP. Internal resources include weekly compliance checks on the data and documents entered in ITMS, information sharing from other FIFA Legal Departments and internally generated reports on stakeholder activity and responsiveness. Media reporting and analysis, of course, are a valuable external source of valuable leads and information, while FIFA TMS also encourages the involvement of clubs and associations in the compliance process through an online ‘non-compliance report form’ which registered TMS users can access through ITMS to report suspicious activity.

The I&C team is composed of qualified lawyers with professional experience in a range of diverse fields such as litigation, commercial law, intellectual property, tax, human rights and sports law. As part of an international team drawn from four continents and speaking seven different languages, each I&C counsel is allocated a list of member associations based on language for which they are responsible. Information regarding possible infringements of the RSTP is then distributed to the relevant I&C counsel for investigation according to this allocation, depending on the club or association involved.

 

The administrative sanction procedure (ASP)

While FIFA DisCo remains the ultimate sanctioning body (Article 9.2.1, Annexe 3), I&C has been authorised by FIFA DisCo to impose sanctions in certain circumstances where its investigations expose evidence of non-compliance. Article 9.2.3 of Annexe 3 state:

FIFA TMS GmbH may also initiate sanction proceedings on its own initiative for non-compliance with the obligations under its jurisdiction when authorised to so by the FIFA Disciplinary Committee for explicitly specified violations”.

The first ‘authorisation’ of this kind was formally approved in 2011, when the DisCo decided to delegate its competence to deal with certain infringements of a “relatively minor or technical nature”. These infringements often have a significant impact on transfers. Such as a club failing to enter a counter-instruction,3 or an association blocking a transfer by failing to confirm a player’s personal details against its own registration records without delay. FIFA Circular Letter no. 12594 notified the members of FIFA of a new administrative sanction procedure (“ASP”) under which FIFA TMS would investigate and potentially sanction clubs and associations, up to CHF 14,000, for ten categories of “explicitly specified” violations of this type.

Under the ASP, which came into force on 2 May 2011, I&C will firstly contact the club or association by way of a letter sent to the email address provided in ITMS for the relevant TMS manager (i.e. the trained employee of the club or association who is responsible for carrying out ITMS-related activity for that stakeholder). This letter will identify the potential infringements and request that the stakeholder take specified remedial steps (such as uploading a document or other specified action to be taken in the system), as well as a statement of the stakeholder’s position.

These actions are subject to a defined deadline – typically seven days, but shorter for time-sensitive infringements which can block the transfer’s progress such as, for example, the failure by the player’s former club to enter a counter-instruction in ITMS after a transfer agreement has been formed (Article 2.4, Annexe 3).

One widely-publicised example of the consequences of this particular infringement was the decision by the FIFA DisCo in the Genoa CFC and CA Independiente case,5 where the Argentinian club failed to enter a counter-instruction for the transfer of the player Julian Alberto Velazquez to Genoa CFC. This case also touched on broader issues such as the pre-conditioning of an International Transfer Certificate (“ITC”) in breach of Article 9 of the RSTP – but the investigation initially started out through the ASP, opened by the I&C department.

If the stakeholder fails to fully comply before the deadline with the directions given, then I&C will send an Administrative Sanction Letter (“ASL”) recommending an appropriate sanction. FIFA TMS has the competence6 to directly impose sanctions, which may consist of a warning, a reprimand and/or a fine up to a maximum of CHF 14,000.7 In cases where a fine has been imposed, and in order to remain consistent with the legal maxim of “audi alterem partem” (let the other side be heard as well) at all stages of the ASP, the stakeholder may indicate its acceptance or refusal of the sanction imposed by signing the form. In the case of the latter, the stakeholder requests the opening of ordinary disciplinary proceedings before the DisCo, in accordance with the FIFA Disciplinary Code (the “FDC”). The matter is then transferred from I&C to the Secretariat to the FIFA Disciplinary Committee who will open ordinary disciplinary proceedings. Upon completion of the investigations, the file (which includes all the documents obtained during the I & C investigation) is submitted to the DisCo. The DisCo may impose a harsher fine or sanction than the one imposed by FIFA TMS.

Although concerned with “relatively minor” infringements, the ASP has proven to be an extremely effective ‘rapid-response’ tool in facilitating the bigger picture of a more fluid and smoothly-functioning international transfer system. Recognising the increased use of ITMS since 2011 and the attendant need to comprise all relevant offences under the same procedure, DisCo decided to expand the number of ASP categories from ten to fourteen. The revised list of infringements now encompasses, inter alia, breaches of confidentiality by stakeholders, as well as failures by releasing associations to respond correctly to an ITC request. With over 5,000 cases opened by I&C to date, the ASP continues to make a positive contribution to ensuring that international transfers happen in a timely, correct and fully transparent fashion.

 

The TCF

Perhaps the better-known type of I&C investigation, however, is conducted through what is referred to as a ‘traditional case file’, or “TCF”. The TCF is essentially an inquiry into any form of alleged wrongdoing relating to an international transfer outside of the fourteen “explicitly specified” ASP infringements, and typically concerns egregious and substantive breaches of the RSTP. For instance, TCF investigations may inquire into third-party influence (Article 18bis, RSTP), third-party ownership (Article 18ter, RSTP) and the international transfer of minors (Article 19, RSTP) to name but a few examples. Numerous I&C investigations under the TCF resulted in the DisCo handing down substantial fines against clubs and associations for breaches of the RSTP, and, in some cases, transfer bans against a range of clubs for breaches of the RSTP.

In 2014, for instance, the DisCo imposed a fine of CHF 450,000 and a transfer ban for two consecutive registration periods against FC Barcelona for multiple breaches of the RSTP including Article 19 and Annexe 2 in relation to a number of minor players.8 The Real Federación Española de Fútbol was also sanctioned for related breaches, incurring a substantial fine. The substance of these decisions were upheld by the Court of Arbitration for Sport. Exercising its investigative remit under Article 4.4 of Annexe 2 of the RSTP, the I&C department was instrumental in detecting, investigating the breaches in question and assisting the FIFA DisCo and its Secretariat in its investigations. In so doing, helping “safeguard the protection of minors” as provided for in Article 1.3 of Annexe 3.

The process followed in a TCF investigation is essentially identical to the ASP: I&C will write to the relevant club or association outlining details of the alleged breach and requesting that the stakeholder provide certain information and documentation before a deadline. Unlike the ASP, however, I&C will not directly sanction the stakeholder for any non-compliance in a TCF – instead, it will transfer the case to the Secretariat to the FIFA DisCo with a detailed and comprehensive case report. The Secretariat will then open a disciplinary proceeding, provide an opportunity for the stakeholder to respond again and present the matter – which includes all the documentation and evidence gathered during the I & C investigation - to the DisCo which can impose sanctions against the stakeholder under the FDC and other applicable regulations.

Aside from the Spanish minors cases, in December 2014, sanctions were imposed against three Indonesian clubs for publishing confidential data from ITMS on social media.9 Fines of CHF 25,000 were imposed against two of the clubs for leaking the data on Twitter, while the third was fined CHF 15,000 for republishing the tweets as well as publishing a confidential letter sent to them by I&C. Noting that the decision followed preliminary investigations by FIFA TMS, in a media release, FIFA remarked that these cases marked “the first time the Disciplinary Committee has sanctioned clubs for such confidentiality breaches through the use of social media”.10

In September 2015, the Belgian club FC Seraing11 became the first club to be sanctioned under the new RSTP provisions prohibiting third-party ownership.12 The DisCo found that FC Seraing had sold part of the economic rights of several players to a third party in breach of Article 18ter, as well as breaching Article 18bis by having entered into contracts that enabled the third party to have influence on the club’s independence and policies in transfer-related matters. The club received a transfer ban of four consecutive registration periods, as well as a fine of CHF 150,000 for these breaches of the RSTP (please note that this decision is not yet final) . This investigation had also been instigated and pursued by I&C using the TCF process.

Further DisCo decisions have followed since then, with sanctions imposed13 against Santos FC (BRA) and Sevilla FC (ESP) for breaches of art. 18bis, as well as fines of CHF 185,000 and CHF 60,000 against FC Twente (NED) and K St Truidense VV (BEL) respectively for breaches of art. 18bis and art. 18ter. The increase in such decisions reflects the expanding responsibility of FIFA TMS in the investigation of transfer-related offences – with third-party ownership, intermediary-related compliance and confidentiality issues all forming an increasingly large area of I&C competence.

 

Conclusion

In every investigation, the stakeholder, club or association has an opportunity to respond and provide an explanation of the particular situation. While investigations and sanctions (where appropriate) are fundamental to promote compliance, they constitute only one part of how the international transfer market is regulated. Article 7.2 of Annexe 3 states that, “to ensure that all associations are able to fulfil their obligations”, ongoing training and support of member associations is the responsibility of FIFA TMS. I&C plays an integral role in the training and education of FIFA TMS stakeholders through a variety of means including presenting at annual workshops, contributing compliance-related advice to the monthly TMS Newsletter, providing legal input on responses to stakeholder queries and conducting in-person visits to clubs and associations throughout the year. As part of this training, our compliance processes are explained to the clubs and associations who use ITMS.

The ultimate goal is compliance - so that all stakeholders, no matter how big or small, play by the same set of rules. This compliance will, in turn, create a smoother, fairer and more transparent international transfer market. Through a series of well-developed compliance procedures, I&C works for the benefit of clubs and associations by, upholding the RSTP, investigating breaches and - where necessary and appropriate - ensuring compliance through investigations and sanctions. I&C endeavors to strike an appropriate balance so that the international transfer of players can become ever smoother, more transparent and more secure.

 

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About the Author

Kimberly Morris

Kimberly Morris

Kimberly Morris is the Head of FIFA TMS Integrity and Compliance department.  She is a former commercial litigation lawyer, and is a Barrister and Solicitor qualified in Canada and England & Wales.

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Barry Lysaght

Barry Lysaght

Barry Lysaght is Integrity and Compliance Counsel for FIFA TMS GmbH.

Admitted to the Roll of Solicitors of Ireland, Barry also holds qualifications in Sports Law and European Human Rights Law. Barry’s previous professional experience includes sports governance, regulatory and disciplinary matters, litigation and refugee and asylum seeker law.

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