MONEY LAUNDERING THROUGH ONLINE GAMES

On 11th October, RUSI published a comprehensive and in-depth analysis saying that in-game artefacts and currencies often have real-life value and can be used to move or invest criminal proceeds – but that there are no clear expectations of what game operators can or should do to identify criminal activity.  It concedes that unofficial sale of in-game items can contravene the game’s rules and has given rise to several court disputes in the US, though it also says that the underground trade has historically been closely related to so-called “gold farming”, the practice of playing online games specifically to obtain valuable items and resell them to other gamers.  It refers to recent reports on the use of stolen bank/credit cards to but in-game “currency”.  The article argues that if a computer game allows players to transfer in-game items to each other, and these in-game items can be exchanged into fiat currency, the gaming company’s position is similar to that of a virtual currency exchange – but unlike the latter FATF and other rules would not appear to compel the application of AML regulation – and neither FATF nor FinCEN states whether in-game currencies are covered by AML/CFT regulations.  So far, governments have confined their examination of in-game transactions to consumer protection and/or gambling issues arising from ‘loot boxes’, the article says; and while subjecting online games to AML/CFT regulation without further evidence would be a step too far, governments should engage with the industry to clarify expectations in relation to the identification of criminal conduct and its reporting. Furthermore, the companies themselves should consider instituting customer verification and voluntary reporting of suspicious activity to law enforcement if their in-game items trade for fiat currency, whether officially within the game or on extraneous platforms.

https://rusi.org/publication/rusi-newsbrief/gaming-system-money-laundering-through-online-games

This blog is primarily for my own use, to keep informed and up to date. However, if you would like to say thank you (and perhaps help me get a new, better laptop when I am away…) you can “buy me a coffee” at https://www.buymeacoffee.com/KoIvM842y

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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