As many as one in four sports clubs – such as martial arts clubs – are tax evaders and potentially susceptible to money-laundering activities, MPs heard on Thursday.
The reveal was made by head of the Register of Societies, Clubs and Institutions Savvas Parmatzias, head of the Register of Societies, Clubs and Institutions.
He was testifying at the House interior affairs committee, discussing the ‘gray area’ where sports clubs register as non-profit societies, earning income they don’t declare.
Parmatzias cited the case of one club – not a sports club – owing an estimated €500,000 in taxes.
“We’ve got societies/foundations that are high-risk in terms of money laundering,” he told parliamentarians.
“We’ve got a charitable foundation which manages assets worth €8 million, as well as shares and securities, but it only gives €3,000 in charity every year.”
In another case, a commercial bank reported to authorities that money left a certain sports club and went straight into the accounts of the club’s chairman and his relatives. The case had drawn the attention of Mokas, the anti-money laundering unit.
Essentially, the issue concerns the proliferation of such societies or clubs which – although money-making enterprises – operate under the cover of non-profits.
Costas Constantinou, permanent secretary at the interior ministry, said several such entities have been struck from the Register of Societies, Clubs and Institutions.
The goal of these deletions is not to go after clubs in general, he added, but rather to send the message that this impunity will not be tolerated.
In many instances, martial arts clubs operate without oversight from the Cyprus Sports Organisation (KOA).
He also mentioned that some of the outfits generate income running in the hundreds of thousands of euro – with the money going into the pockets of specific individuals.
The official said the interior ministry – working with the attorney-general’s office – are jointly drafting legislation to regulate the matter.