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As financial crime and money laundering strategies become more sophisticated, so should AML practices, especially within the online gaming industry.
Over $60 billion in purchases in 2020 With over 3 billion active global players alone, the online video game industry is booming, and with it new forms of money laundering.
These unregulated channels are attractive to fraudsters because they can quickly adapt to the inefficiencies of both local and international organizations.
Microtransactions seem to be ubiquitous in gaming, with many setting them up as one of the main pillars of their business model.
Essentially, microtransactions represent player purchases of in-game items for real money.
Add players buying and selling in-game items to a poor KYC process and you have a recipe for financial crime as money launderers start moving money using the exact same P2P transfers.
In fact, the virtual economy acts as a clever method of money laundering as it eliminates the need for direct transfers from bank accounts.
A money launderer buys an item or currency online, transfers it to a partner in crime who then sells it and then either converts it to fiat currency and wire it directly or sells the item You can wire the proceeds to your account. .
You can also purchase items with stolen credit cards. Scammers don’t even need to transfer purchases between accounts as they just share login information.
And since another party has access to their items and virtual funds, it is clear that they can transfer them any way they like.
Stolen credit cards can also be used to purchase in-game currency and items for sale on the dark web. The most common example is probably seen in the popular game Fortnite.
Criminals create accounts and use stolen credit cards to purchase in-game digital currency (V-Bucks). They then used his V-Bucks to purchase goods, which they exchanged on underground exchanges for major cryptocurrencies such as Bitcoin and Ethereum, as well as private currencies such as Monero.
Many of these practices highlight the seeming lack of regulation in the online gaming industry and clearly lead to the question:
Government regulations currently appear to be still at the consumer protection stage.
There was a known intervention regarding loot boxes. This is a purchasable in-game “package” item whose contents are randomly generated when opened.
In Europe, the Dutch Gaming Authority, the Belgian Gambling Commission, Englandand many other countries have taken a tough stance on regulating these loot boxes.
However, when it comes to AML regulations (or guidelines), government responses don’t seem to be drafted as quickly.
Even without appointing industry regulators, governments will need to work closely with the gaming industry, but it’s still unclear who will take the lead in this conversation.
And with no clear criteria by which illegal activity can be identified and reported, the biggest problems today are:
While there are few clear rules about what gaming companies should do when they actually detect criminal activity, there are a few ways they can work with law enforcement.
In fact, although there is no legal requirement, many companies are now working to obtain a license as a money service business (commonly called MSB).
By following that path, MSB licensed businesses must comply with AML/CFT regulations (anti-money laundering and combating the financing of terrorism).
some companies Restricted or Totally Prohibited Transactions A few items to prevent shady practices from polluting the game and the game’s economy.
As financial crime and money laundering strategies become more sophisticated, so should AML practices, especially within the online gaming industry.
Over $60 billion in purchases in 2020 With over 3 billion active global players alone, the online video game industry is booming, and with it new forms of money laundering.
These unregulated channels are attractive to fraudsters because they can quickly adapt to the inefficiencies of both local and international organizations.
Microtransactions seem to be ubiquitous in gaming, with many setting them up as one of the main pillars of their business model.
Essentially, microtransactions represent player purchases of in-game items for real money.
Add players buying and selling in-game items to a poor KYC process and you have a recipe for financial crime as money launderers start moving money using the exact same P2P transfers.
In fact, the virtual economy acts as a clever method of money laundering as it eliminates the need for direct transfers from bank accounts.
A money launderer buys an item or currency online, transfers it to a partner in crime who then sells it and then either converts it to fiat currency and wire it directly or sells the item You can wire the proceeds to your account. .
You can also purchase items with stolen credit cards. Scammers don’t even need to transfer purchases between accounts as they just share login information.
And since another party has access to their items and virtual funds, it is clear that they can transfer them any way they like.
Stolen credit cards can also be used to purchase in-game currency and items for sale on the dark web. The most common example is probably seen in the popular game Fortnite.
Criminals create accounts and use stolen credit cards to purchase in-game digital currency (V-Bucks). They then used his V-Bucks to purchase goods, which they exchanged on underground exchanges for major cryptocurrencies such as Bitcoin and Ethereum, as well as private currencies such as Monero.
Many of these practices highlight the seeming lack of regulation in the online gaming industry and clearly lead to the question:
Government regulations currently appear to be still at the consumer protection stage.
There was a known intervention regarding loot boxes. This is a purchasable in-game “package” item whose contents are randomly generated when opened.
In Europe, the Dutch Gaming Authority, the Belgian Gambling Commission, Englandand many other countries have taken a tough stance on regulating these loot boxes.
However, when it comes to AML regulations (or guidelines), government responses don’t seem to be drafted as quickly.
Even without appointing industry regulators, governments will need to work closely with the gaming industry, but it’s still unclear who will take the lead in this conversation.
And with no clear criteria by which illegal activity can be identified and reported, the biggest problems today are:
While there are few clear rules about what gaming companies should do when they actually detect criminal activity, there are a few ways they can work with law enforcement.
In fact, although there is no legal requirement, many companies are now working to obtain a license as a money service business (commonly called MSB).
By following that path, MSB licensed businesses will be required to comply with AML/CFT regulations (Anti-Money Laundering and Countering the Financing of Terrorism).
some companies Restricted or Totally Prohibited Transactions A few items to prevent shady practices from polluting the game and the game’s economy.
