Amid concerns that investors are being lured into dealing with unregistered crypto firms, the U.K.’s Financial Conduct Authority (FCA) is warning Premier League football teams against signing sponsorship deals with unauthorized firms.
In a letter to the teams, the FCA said it has seen an increase in football clubs signing deals with crypto firms that may be operating unlawfully in the U.K. and breaching the FCA’s rules on providing financial services, or engaging in financial promotions, without permission.
“Both activities are criminal offences,” the regulator said, adding that football clubs that enter into sponsorship arrangements with unauthorized firms “may face legal, operational, and reputational risk.”
These kinds of deals “risk conferring legitimacy on these firms,” the FCA said, adding that they may expose investors to harm and potentially create money laundering risks and legal liability for the teams themselves.
In the letter, the FCA called on football teams to carry out “appropriate due diligence” before entering into sponsorship deals with crypto or other financial firms, and to monitor these firms on an ongoing basis to ensure that they’re not working with firms that may be operating illegally.
It also advised the clubs to ensure they understand the source of any sponsorship money they accept, as funds obtained through unlawful financial activity may be considered proceeds of crime — so these kinds of deals could “expose them to financial crime risk and reputational damage.”
Additionally, the teams’ own promotional content that deals with sponsors’ services could be subject to the FCA’s rules on financial promotions, it noted.
The FCA said it’s actively monitoring the risks arising from sponsorship arrangements, with a focus on deals that may facilitate unlawful activity or increase the risk of investor harm.
The regulator said it “considers these matters to be serious, given the potential for consumer harm and the risk of conferring legitimacy on firms operating outside the regulatory perimeter.”
“Millions of football fans trust their club’s badge. Clubs should not let unauthorized financial firms exploit that loyalty by putting potentially dodgy products in front of millions of fans,” said Lucy Castledine, director of consumer investments at the FCA, in a release.