How Money Laundering Works in Online Gaming and how to Prevent it

Money Laundering in Online Gaming

Money Laundering: If the value of funds being laundered is any evidence, crime seems to pay. Amount of laundered money is more than $1 trillion each year, according to a report. It is difficult for launderers to launder this huge amount of money in traditional ways.

For instance, $1 million U.S.D measures about 256 pounds and if the amount is $1 trillion, it weighs 128,000 tons. Launderers have to carry more than 128,000 tons of weight every year to launder money. That’s why they are using more advanced ways for their fraudulent activities.

According to the same report, traditional money laundering is reducing and online money laundering is increasing every year. It seems that fraudsters are using the internet to convert their illicit money into a legitimate one and launder it in a quick and efficient way.

Fraudsters are using the internet to launder their money because it is also challenging for regulators to track ill-gotten gains online. Money launderers feel more safe and secure to launder money while using the internet.

Here is the process of changing dirty money into clean and white money. This process is essential to understand to combat money laundering.

How fraudster transforms illicit money into a legitimate one?

Here is how money launderers obfuscate law enforcement agencies.

Placement

The first step is they insert the dirty money into a business that is legitimate or appears to be legitimate. The trick they use is, they break their money in small figures and inject it into a business without suspicion. They also deeply understand, how often they should not invest to stay away from suspicion.

Layering

After a successful deposit, criminals will use this amount in various financial transactions. This attempt will make it challenging and difficult for financial institutions and law enforcement agencies to determine the initial money exchange. Here are some methods they use.

• Wire transfers from one account to another
• Changing the money’s currency
• Bank to bank transfers
• Transfer to different countries
• Purchasing high-value items

Integration

Payday for a criminal is when he feels, the opportunities for tracking the illicit money are slim to none.

This is a traditional approach of money laundering but the use case is the same while laundering money online. Fraudsters convert their traditional approach into digital to launder money quickly without getting caught.

How money laundering works online

Online gaming could be used as a vehicle to launder money, have you ever guessed that? Massively Multiplayer Online Roleplaying Games (MMORPG) are a precise approach to clean illicit funds. MMORPG could be used to clean money for two basic reasons: Virtual currency and multiple players.

Term massively multiplayer is used for games that have millions of members discovered all over the globe such as Pubg and Warcraft. These type of games make it easy for money launderers to hide themselves using virtual currency, such as bitcoin.

Using these games money launderers send virtual currency from one country to their associates located in another country. Later, this virtual money is transferred into real money, this left no trace for law enforcement agencies and authorities to track and follow criminals.

Conclusion:

Online games can prevent money laundering through their channel to stay away from hefty fines by applying KYC & AML compliant identity verification. Before sending payment a game should ask to provide personal information of a user and verify it to find if a user is blacklisted by authorities or not.

Not verifying a user and letting the process move on can cause reputational destruction to a game and even authorities can block it worldwide.