IR Global kodulehel avaldati jurist Raiko Pajul artikkel

06.12

Money laundering through the use of online multiplayer game in-game assets

E-sports popularity grows each year, with new players and investors focusing on the new market more and more. Game developers release new games and updates as fast as possible and find new ways how to keep their players focused more on their game. This has brought up a new concept, in-game assets, as means of player focus and developers’ income. The idea is simple – when more people invest in the game, the more they will play it and developers will profit from the gamers.

While the gaming community knows what in-game assets are, in the context of legal definitions, it is much more difficult. As there is no universal definition of what in-game assets are, it is difficult to give an overall definition in this article. In-game assets can vary from the gold the player collects in the game, to skins that can be bought or won in other games. The most popular games, where in-game assets can be found are for example “Fortnite”, “World of Warcraft”, “Counter Strike” or “PlayerUnknown’s Battlegrounds”.

Most of the gamers see in-game assets as a way to illustrate their character in the game or gain some advantage, little is known about the use of in-game assets as money laundering tools. As it can be used to hide illicit money or income. This comes from the opportunity the game developers have opened – their in-game assets have monetary value. These assets can be sold in third-party marketplaces or in some situations in the marketplace owned by the game developers themselves. These marketplaces provide gamers the opportunity to buy and sell in-game assets for flat currency. As it is said before, most players use it for the purpose that in-game assets were developed and visit the marketplaces and online auctions for fun, others can use these places as means to launder illicit funds.

Money laundering through online multiplayer games’ in-game assets have the benefit of transferring funds all around the world with only the push of a button, transferring large amount of funds through multiple accounts and games. In the meantime, hiding your activities as well as identity and location out of sight of law enforcement is easily achievable with only modest IT skills.

This article will bring out some of the major gaps that may prevent prosecution from detecting and catching money launderers, who use in-game assets and marketplaces to launder money.

One major gap that benefits the money launderers is the principle of territoriality. The online world has no limits and it offers gamers to opportunity to connect with anyone around the world. National or EU member states jurisdiction extend to their boarders and co-operation with states outside these boarders may prove difficult or even lacking in cases, where these states may have difference of opinion in these matters or their diplomatic relations are nonexistent.

The European Parliament and the Council have proposed a union wide regulation and directive on digital evidence, which would improve and legislate Union wide the collection of digital evidence and its use. The main prospect is to allow one Member State judicial system to issue a request or order to receive evidence about a suspect from another Member State.  The idea to have large co-operation and information exchange is novice, but it may fall short. As mentioned earlier, the online world has no boarders, meaning that countries outside the European Union would not fall in the scope of these legal acts.

Other gaps, that benefits money launderers is anonymity. The situation where a person can hide their true identity, source of income or their actions with illicit funds. As prosecutors would need sufficient evidence to convict someone of money laundering, criminals can hide themselves and their true identity by using different types of software programs and other means of disguise. These include IP hiders, cookie disablers, using multiple servers across multiple continents and countries. Prosecutors often have to rely on criminals making mistakes in hiding their identity or actions and using that mistake against them.

Most games and marketplaces follow the KYC (Know-Your-Client) principles, as all users need to identify themselves. Most games and marketplaces commonly use credit card information as means of identification as it is the most well-known form of online identification and there are not many other options to use. The negative side of this KYC aspect is that credit card information is sold in the black markets for a very low price. Some estimate that a credit card information can be bought under 5 US dollars, making the KCY principle inapt.

In a situation where law enforcement is investigating a money launderer, the mixture of different legislations and un-even legal principles may become an obstacle when trying to prosecute someone for money laundering. Overall this means that even when a nation or a union has legislation in place for combating such problems, there is no international applicability, resulting in a scenario where laws contradict or co-exist without having an effect.

The United Nations has composed a manual (Basic Manual on the Detection and Investigation of the Laundering of Crime Proceeds Using Virtual Currencies). This manual highlights and analyses how online virtual currencies are used to launder money. It includes analysis of cryptocurrencies as well as online multiplayer in-game assets. The manual was composed to provide prosecutors and investigators practical information on the detection, investigation, prosecution and seizure of criminal proceeds through the use of in-game assets and virtual currencies. At the same time, this manual can be used to draft a UN wide legislation. If ratified by most UN member states it would eliminate or reduce the possibility of national laws interfering with each other and would standardize the rules for every member of the UN. The universal legislation would include definitions and obligations for game developers and marketplace owners. The UN-wide legislation would be the most effective solution for prosecutors and investigators and would improve the co—operation between different nations.

With the popularity of e-sports increasing every year, it is necessary to highlight and draw attention to the darker side of online multiplayer games. Criminals can use these games and their in-game assets to launder illicit money, while staying anonymous and hidden from law enforcement. One solution offered in this article is to draft a worldwide legislation affecting all users equally and setting the tone for future developments.

Raiko Pajula defended his masters’ thesis on the subject, the work is available at:  https://digi.lib.ttu.ee/i/?10143