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Virtual currency being used by criminals to 'clean dirty money'
StoogeMonkey
Member Posts: 185
Speaking at the Cards and Payments Australasia Conference in Sydney yesterday, tech publication iTnews reported Mr Dyson as saying criminals were using online virtual worlds to communicate and transfer funds around the world.
He said federal and state police had deployed resources to investigate virtual world money laundering, which he said was a "growing area of interest".
Mr Dyson wouldn't reveal the methods used by criminals or the names of any virtual worlds they used, citing fear of giving criminals or would-be criminals a "how-to" guide in money laundering.
buuuut
"But compared to laundering it at the track or a casino or offshore financial havens I would suggest that the online stuff is a fraction of a fraction compared to all the other ways that criminals launder funds which are still very successful," he said.
Its still worrying though
For those who buy gold... think again.
Comments
Looks like they mean games like Entropia Universe and Second Life where cash can be transfered directly by in-game means, like a real bank would do.
"Only in quiet waters do things mirror themselves undistorted.
Only in a quiet mind is adequate perception of the world."
Hans Margolius
LOL, this may or may not be real issue, but c'mon, now gold buyers are the cause of money laundering?
Stop.
"True friends stab you in the front." | Oscar Wilde
"I need to finish" - Christian Wolff: The Accountant
Just trying to live long enough to play a new, released MMORPG, playing New Worlds atm
Fools find no pleasure in understanding but delight in airing their own opinions. Pvbs 18:2, NIV
Don't just play games, inhabit virtual worlds™
"This is the most intelligent, well qualified and articulate response to a post I have ever seen on these forums. It's a shame most people here won't have the attention span to read past the second line." - Anon
Years ago Raph Koster, just by chance, met some Federal agents. On a flight, I think. They evetually got into a conversation on this issue. It was early on, and these agents didn't even know about MMO's and RMT. Eventually they asked Raph how much money might be involved, he told them and they said this...paraphrased..."Well, that's not drug money, but it's terrorist money."
So going by that, I'd say that the big money laundering operations (drug money or not) probably can't use MMORPGs effectively. While smaller operations could. Terrorists have been a cause for concern, but I haven't seen anything as a fact on this. But I think the governments are all over this with their detection programs.
So I don't see this as a big issue, not any bigger than any other aspect of life with finances for tools of trade. And certainly not under the radar anymore. Maybe nothing more than some small scale tax evasion schemes.
Once upon a time....
Well, we should have known criminals would try something like this sooner or later though unsurprisingly they're not that good at it yet. Other methods have been fine-tuned for years, this has just gotten started. Least the cops aren't stupid. And hey, it might mean that leet player you meet in a dungeon really might just be FBI. :P
Who knows, maybe this might actually get the government involved in shutting down or penalizing people who buy from all of those illegitimate gold sellers the plague the MMOs we love.
I can dream...
I can understand the theft and deceiption with virtual currency in games like Second Life. Also the fraud using stolen credit card numbers etc.
But the part about money laundering left me confused. How does virtual currency help with that? Its not as if you can buy some property in Second Life with a bag of dirty cash. It has to go through bank transactions, so how does this work for money laundering?
If that were the truth about gold buying, sh*t I would be the Manuel Noriega of WoW gold lol...
Also, for those that buy drugs and fund terrorism - think again.
Eleanor Rigby.
In order for that to work, you'd have to buy virtual currency or goods with stolen money or drug money, then sell the virtual goods somewhere else. You don't buy virtual goods with cash, you buy them with credit cards and checking accounts. The banks are the ones controlling the credit cards and checking accounts...the mmorpg link is incidental.
I can not remember winning or losing a single debate on the internet.
Money laundering is basically shifting around money in a manner that can't easily be traced.
Virtual currency works perfectly for this because it's not formaly audited by the government in any manner.
Buy virtual currency with dirty money, which goes to a seller who is outside of the country. Turn around and sell that virtual currency for 'clean' money.
It's really very, and scarily, simple.
Criminals use real money too.Gems are pretty good. Most country's have pawn brokers so they are a universal currency. Er, or so I'm reliably informed.
I get the trace part, but you still need a local broker who takes the risk. The buying virtual currency with dirty money is not possible without putting the dirty money through a local bank transaction first.
I cant believe its just that, because with these games every transaction gets logged. Which actually makes it seem less secure then more 'traditional' forms of money laundering. There are only a few virtual worlds that can handle the amounts of money that tend to get flagged. I dont see any problem for the FBI or Interpol with putting enough pressure on those companies to release transaction logs.
They've been doing it for years, and will continue to. The virtual currency step is just one more cog in an elaborate laundering system that makes it even harder to track the 'clean' money on it's way back to the criminals.
I actually monitor high-level money laundering for my job, so I may be able to provide some insights here.
As mentioned above, the amounts involved in the black market of online gaming are not large. I would roughly divide money laundering into three buckets: small, in thousands of USD (e.g. terrorism financing), medium, in millions of USD (e.g. drug trafficking), and large, in billions of USD (e.g. corrupt government officials and corporate executives). The online gaming black market is definitely in the small category. That's not to say it's not important - it is to the people who are involved - it's just that the amounts are at a smaller scale than most money laundering.
I doubt, however, that the money launderers are using in-game currency for laundering. Small scale laundering tends to use a system of trust. People know each other, so they guarantee each others' obligations, which makes direct transfers of money unnecessary, other than to periodically settle up. If someone needs money transferred outside the system, he talks to a launderer in his country, who then places a call with an associate in the destination country, who then makes the actual payment; the money gets transferred, but cash does not actually move through the system (the two associated money launderers will settle up at some future point, typically by cancelling offsetting transactions).
What the money launderers may be using virtual worlds for is the communication aspect, not the money transfer. They know perfectly well that a serious risk is in their communications, either mobile calls or e-mails, being monitored. But virtual worlds are monitored little, if at all. They don't have to worry about their mobile being tapped or their e-mail account being compromised if they can drop into an online game and do a private chat with their counterparts in the system.
It's an interesting angle, and I'll do some thinking about it. Most the people I am interested in in my work are operating at a much higher level and tend to prefer face-to-face communications, as they are suspicious of electronic communications.
For players, the primary risk is computer security. Gold buyers and sellers can and will attempt to break into your system, guaranteed. They operate in computer piracy safe havens like Eastern Europe and Southeast Asia, and have little fear of negative repercussions. They can and will steal not just your online account, but will attempt to compromise your e-mail account in order to steal credit card numbers and even your identity. The risks are real, and everyone here should be aware of them.
nice business model.
mmocompany which sells gold ,1000 virtual gold for 10 real euros
companys employee buys 1000 gold from his company for 10 euros and maybe sells those for a player for 5 euros.
and you can imagine the rest.
unlimited money mon.
Generation P
For those who think it can be tracked by bank transactions, or that you need to do this through a game such as entropia your missing the idea..
I'm a criminal with some dirty cash, i give it to an acquaintence who puts it into his bank account, this acquaintence has a couple of hacked WoW accounts,
he buys goldon one of the hacked accounts with the cash he deposited in the bank account, then mails it to another hacked account, (back and forth between several accounts most likely but lets say once to keep it simple),
the acquainteance then gives the password of this hacked account with the gold to me(the original criminal),
and i then sell the gold to a gold selling website, at about a 5% loss to what I bought the gold for(effectively a cut for cleaning the money), and the money turns up in my account clean..
thats a simplified example but it demonstrates that link of 'mailing gold' isn't monitored by authorities, so its a way of cleaning money.
It also fills a niche in the "cleaning money industry"(if you will), because the 'professionals' typically wont handle small sums of cash as its not worth their time, but this provides a really easy way to clean small amounts of money relatively easily
Farmers, RMT,terrorists and general BS. The day the rich world want to stop money laundering all they have to do is forbid any individual or corporation that want to do business with them to have any kind of link to offshore operations. But guess what the rich of the rich world benefit from the existence of offshores so that aint gonna happen.
BTW the world total revenue for weapons sold "illegaly" is much bigger then for drugs. All the focus on drugs always is to take blame on pariah countries like Afeganhistan, Colombia , Mexico instead of the rich democracies that profit from weapon selling that in turn end up in part in those same pariahs.
Once i saw a small interview where a person that leaded the "war" on drug trafic in some big brazilian city said he wasn´t in war with local drug lords. He first was at war with countries ranging from Switzerland to USA. Only way he could have any chance to win that "war" would be by destroying the supply of those weapons first. Not that the poor man was gonna blow up factories but still in his mind the first enemy to go down was that one.