Mafia uses Skype for secure calls and online games for money laundering. Even FBI is searching for criminals in online worlds. How does Internet inspire criminal activities?
The online virtual world is a 3D computer-based online role playing game and/or environment. The game takes place online and can have thousands of people playing simultaneously with borderless restrictions and little regulation. It is more formally described as a computer-based simulated environment. This type of virtual world game is referred to as a massively multiplayer online game (MMOG). It allows all players to interact with each other in tandem. Some of the more well know games are: Second Life, Worlds, There, EverQuest and Worlds of Warcraft.
There are many types of games, some are played for competition and others are just environmental. It should be noted immediately that it does not appear that these sites were developed for nefarious purposes. However, just like in the real world, criminal elements will eventually seize the opportunity to make or steal an easy buck at the expense of someone else. Currently, the virtual world, with little regulation or observation by law enforcement, is fertile ground and ripe with opportunity for the criminal element.
In the virtual world there is negligible means of monitoring financial activity, sparse due diligence, paltry customer identification rules, nor any mandated forms or reports to complete. The virtual realm is a completely unregulated and a voluminous means of money movement. This could potentially provide a safe harbor for a criminal element including money launderers, fraudsters and/or terrorists. This could be considered as the virtual counterpart to a Hawala.
Virtual Money Laundering: How it works
Note: Second Life.com being the largest and most popular virtual world was used as the template for review.
Users, called "Residents," move about and intermingle with other residents via a cartoon/human-like character called an "Avatar." Currently there are approximately 9 million residents in Second Life. The area that your Avatar moves (or flies to or transports to) is called the Metaverse (3D virtual reality world). Your Avatar could find himself at an island beach resort, shopping mall, nightclub, or casino just to name a few. The possibilities are limitless. The residents are able to move about, interact with and/or chat privately with other residents, participate in activities and trade or buy virtual items and/or services from other residents. Additionally, virtual real estate may be purchased, sold and rented and virtual casinos are plentiful.
To purchase goods in the Metaverse, Second Life has created its own currency called Linden dollars (Linden is the name of the game developer) which can be exchanged for US dollars. Currently, on Second Life the exchange rate is approximately 270 virtual dollars for $1.00 US. This is the root of a very complex issue. Once a value is placed on an object (no matter what that object is, real or virtual) criminals will find a way to abuse it either by fraud and/or money laundering. Of course, in the money laundering world, anything of value can be laundered. A player/resident may use his actual credit or debit card to purchase online money and then redeem those credits for actual money with another player in another country and in that country's unit of currency. Additionally, another question that will ultimately arise will be the issue of taxation or the lack thereof.
To create an account is just a matter of providing a name and email address. There is no verification of this information. To make the purchase of the Linden dollars a credit card may be used or a PayPal account. This is where there may be some form of investigative tracking, however, if fictitious information was used to establish those accounts a dead end will quickly be encountered.
Money laundering scenarios
A launderer opens up numerous separate virtual accounts, all using fictitious id. The accounts are all funded with the proceeds of an organized crime sports betting operation. The launderer can make purchases in the virtual world to and from himself by using those accounts as if he were purchasing assets from other residents. Subsequently, he may direct all his proceeds to an account that he maintains. He can then withdraw those funds either from the bank or using an ATM. It would be nearly impossible to trace the source of those funds.
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