Second Life – ideal world for money launderers and terrorists
Second Life is a land created in 2003 by a San Francisco-based technology company Linden Lab. It is a planet of 6 million citizens with no police, no courts, no taxes, just slightly controlled fast-growing economy is lightly, banks and the stock exchange with no basic regulation.
Thanks God, it’s not the real world, as this is a haven for money launderers, fraudsters and terrorists where they can easily hide and move assets.
While Second Life is a virtual online world, it seems obvious that the criminal networks are a great threat to move from the cyberspace into our world.
A study for Britain’s Fraud Advisory Panel (FAP), a watchdog established by the Institute of Chartered Accountants in England and Wales, is advising that the Government should extend financial regulation of the real world into Second Life and some analogical games. The report warns that those who play these games could transfer large amounts of money all over the world without restriction and much risk of being detected. According to the FAP, criminals and terrorists could use the game for moving funds and avoiding surveillance as well as for money laundering, tax evasion, credit card fraud and identity theft.
The number of players of Second Life has increased from 700 000 in autumn 2006 to 6.2 million.
Users create their online characters called avatars to mingle with others all around the world. They use a pretend currency called Linden dollars to buy and sell any virtual items for fun or leaving impressions as well as to start up businesses. What is crucial, Linden dollars can be freely exchanged for real USD. In average, about GBP 750 000 changes hands a day.
In May, German prosecutors have launched a probe into allegations that child pornography was sold on Second Life.
In April, Linden Lab asked the FBI to assess whether its virtual casinos break US laws against online gambling.
A solicitor and chairman of the FAP’s cybercrime working group, Steven Phillipsohn suggests that thereis nothing virtual about online crime as it is all too real and advised the government to approach this issue seriously. According to him, the risk of money laundering is obvious and “there will be a migration of fraudsters into these sites when they see all of the opportunities”. While commerce, relationships and criminal activity are hidden in virtual online communities, the money is real and it is a real loss in case of tax evasion, fraud, or theft.
In 2006, a Chinese-born teacher living in Germany, Ailin Graef claimed to have been the 1st one to make USD 1 million on Second Life, through her avatar developing virtual properties and selling or renting them to other avatars.
A world-famous Internet search company, Google, intends to compile psychological profiles of web users by means of monitoring the way they play online games. Google expects to get information about the personalities and preferences of users by observing their online behaviour. The details on users could be sold to advertisers.