The methods used for money laundering are increasing and changing day by day. With the development of technology, the video games sector has also expanded considerably. The expansion of the video game industry has brought some crimes, for example, money laundering. Criminals produce goods and coins that can be bought and sold with dirty money with video games.
How to Money Laundering in Online Video Games?
For money launderers, traditional methods of money laundering are hardly used anymore. Regulations on financial institutions, including the Anti-Money Laundering (AML) and Ultimate Beneficial Owner (UBO) requirements, do not allow criminals to launder money in traditional ways. That's why cybercriminals are looking for new ways, the video game industry is one of these new ways. The video game industry carries money laundering risks due to in-game trades. Although not every game, some video games have game materials that can be purchased with real money, for example, weapons, special clothes. When people play, they get these materials by paying real money.
The use of both convertible and non-convertible virtual currencies in the video game industry and the anonymity provided to players created an environment for criminal activities. In online video games, when purchases are made for the game, users enter their credit card information into the system, criminals can steal this credit card information and perform money laundering activities through these accounts. Moreover, Cybercriminals usually log into accounts without two-factor authentication and use stolen credit card information to purchase in-app money. These in-game materials and currency they buy can then be sold at a lower price in an online marketplace. Game owners may not find any solution even if they are aware of this event.
Reasons Why Cyber Criminals Choose Video Game Industry For Money Laundering
In the online video game, this industry has been a potential target for criminals since real in-game purchases have appeared. Due to the strict AML Regulations found in financial institutions such as banks, these institutions are now challenging to launder money. However, contrary to this situation, this sector is attractive for criminals because there is no regulation in the online video games sector to prevent money laundering. In the online video games industry, money laundering has become easier in this industry because of a lack of customer identification and due diligence, virtually no monitoring of financial activities, and lack of reports on reports such as suspicious activity reports (SARs).
On the other hand, Whether virtual currencies that cannot be converted can not really be converted is an issue which frequently generates a great deal of heated debate. Non-convertible virtual currencies can be used to purchase in-game objects or maps that cannot be exchanged for any other currency. Although the Financial Action Task Force (FATF) has reported that a non-convertible virtual currency cannot be replaced with a fiat currency, In a report FATF published, she stated that criminals can create a secondary black market to change this currency and can convert this currency into a virtual currency.
Striking Notable Examples
The Counter-Strike video game series had CS: GO container keys purchased in-game, and these purchased items could be sold and exchanged on the Steam Community Market. However, with a sudden decision made by the Counter-Strike video game series in 2019, CS: GO container keys can no longer be bought and traded. Counter-Strike posted this notice on a blog and reported it to its users. According to the Counter-Strike blog, the reason they made this decision was that worldwide fraud networks switched to using CS: GO keys to liquidate their earnings. In addition, they noted that almost all major purchases traded on the market are believed to be fraudulent.
Another important example is Fortnite, the popular online game, turning into a money-laundering paradise. This is stated in Sixgill's Carding and The Digital Gaming Industry report. Fortnite, with monthly revenues of hundreds of millions of dollars, is a battle royale game. The game's digital currency is V-Bucks and in-game weapons are used to purchase accessories. Criminals sign up for Fortnite, create a profile, and buy lots of V-Bucks or accessories with illegal or illegal credit cards. Afterward, they earn clean money by selling these inventories, which they bought, to cheaper prices. They carry out this sale on black exchanges. Criminals announce the black market from their social media accounts and attract customers. Generally, these payments are processed through bitcoin. As a precaution, Epic Games with Fortnite reported that players should protect their accounts and not share their account information with others.
How the Online Video Game Industry is Measuring Money Laundering?
Although there are not many regulations to prevent money laundering in the online video game industry, FATF added a note to the 15th Money Laundering Recommendation in 2019. According to this note, approaches to the regulation and supervision of virtual asset service providers (VASP) have been introduced. It is believed that the money laundering activities in this sector will decrease as regulators bring new regulations to the Online Video Games sector. Because of the fact that as money laundering continues to grow in online video games, criminals will increase their criminal activity by taking advantage of the absence of regulations. If there were regulations such as a bank, FinTech, and gambling, criminals could not have done so much money laundering in this sector.