FIFA Scandal Highlights Corruption in Global Financial System

The President of international soccer's governing body, the Federation Internationale de Football Association (FIFA), is resigning amid corruption allegations. Sepp Blatter led FIFA for 17 years before resigning June 2 after winning re-election to another term as the organization's leader. Just before his resignation, Swiss authorities arrested seven FIFA executives as part of an FBI probe that indicted 14 people on bribery and corruption charges. Twenty-six banks are named in the indictment, including major US firms such as Citigroup and JP Morgan Chase.

"This level of corruption was only possible with the complicity of the global banking system," said Eric LeCompte, executive director of the religious development organization Jubilee USA Network. "The FIFA scandal shines a light on how corruption is protected and supported by US banks."

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The corruption and bribery charges relate in part to FIFA's process for awarding world cups to host nations. Authorities are investigating South Africa's 2010 World Cup as well as upcoming World Cups in Russia in 2018 and Qatar in 2022. More than $150 million in FIFA bribes flowed through the US financial system, but in only one instance did a bank reject a money transfer out of suspicion. While US investigators are still determining if any banks broke US law, experts indicate that the transactions were likely structured to avoid triggering US anti-money laundering alarms.

The indictment also alleges that defendants used shell companies to move bribe money around the globe. The United States is currently one of the easiest countries in the world in which to open a shell company without disclosing the company's true owner. Jubilee USA supports bipartisan legislation to address shell companies - the Incorporation Transparency and Law Enforcement Assistance Act.

"We need stronger transparency laws to ensure that criminals can't move money around the world," noted LeCompte. "There is bipartisan legislation to do just that and Congress should pass it immediately."

The developing world loses nearly $1 trillion each year to corruption, crime and tax evasion. Those losses, called "illicit financial flows," are largely facilitated by gaps in international money-laundering and transparency rules. In 2012, developing countries lost more than 10 times as much to illicit financial flows as they received in official development assistance, according to the US-based research and advocacy organization Global Financial Integrity.

"Corruption destabilizes our global economy and hurts the poor most of all," stated LeCompte. "The religious community prays that the sins of FIFA bring about a more transparent, stable world."