The gaming world over the last couple of years has exploded with a plethora of unique environments and their own in-game economies. This is especially true in games that allow users to trade items with each other. But with these games come secondary economies — storefronts that offer to trade or gift you specific items in-game in exchange for real world money. Maybe you really want that white Octane body in Rocket League and are willing to pay for it, but have you ever stopped to think where these items are coming from? And where the money is going? Could you be inadvertently funding terrorism or helping criminal enterprises launder money? The answer is quite possibly yes.
Disclaimer: I have worked my entire career in the financial services industry, much of which as a financial crimes investigator. However, the opinions expressed in this article are mine alone and should not be considered as representative of my current or past employers. All cases presented below are derived from public sources.
In short, money laundering is the process by which proceeds from illegal activity are moved, obfuscated, and made to look like clean money from legitimate sources. If you were a fan of Breaking Bad, you saw this with Walt using his drug money to buy a car wash — and the drug money was slowly integrated and mixed together with the legitimate income from real customers at the car wash. The result is that on paper, Walt’s money appears to be coming from his successful car wash business.
Money laundering through video games isn’t quite as straightforward. Instead, it operates on a principal known as an Informal Value Transfer System (IVTS). In real-world money laundering IVTS schemes, someone may use stolen drug money to buy cars for cash at auction, export them across the border, and sell them for local currency.
In the virtual world, this would occur much the same way — acquiring in-game goods with dirty money, and then reselling them on a storefront in exchange for clean money.
The Fortnite Case
Earlier this year, The Independent reported on one such IVTS money laundering scheme using the popular game Fortnite. The way this scheme worked was that wrongdoers would acquire stolen credit card information from the dark web and use these cards to purchase the in-game currency, V-bucks.
The launderers would then visit various forums or online marketplaces offering to sell their V-bucks at a discount. Players would scoop up the V-bucks, pleased with the great deal they got, and the criminals would then have seemingly clean money that they could integrate and obfuscate throughout the online financial world.
Scams involving in-game items and trading on the secondary market are not new. Hackers have been able to exploit innocent players’ Xbox Live accounts to make in-game purchases in FIFA that were quickly traded and sold away for cash.
This scam has evolved over time to eliminate the need to hack player accounts completely. In 2016, the FBI raided a group of hackers who were able to exploit the FIFA code itself to mine in-game currency and sell it on a secondary market for cash.
This scheme goes as far back as the game Second Life, where players were able to buy, sell, and lease virtual property to each other — attracting criminals to invest in virtual property and businesses, and use the revenue from Second Life to appear as legitimate income.
How Do We Stop It?
While the use of popular video games as a vehicle for money laundering is certainly a risk and real possibility, there appears to be no real solution on the horizon. In the United States, businesses like banks, check cashing stores, jewelry stores, casinos, insurance companies, foreign currency exchange kiosks, and others are subject to federal law requiring that they have anti-money laundering (AML) policies and programs in place that describe how a company intends to monitor and deal with potentially suspicious activity. Most of these types of businesses also have a legal obligation to report suspicious activity to a federal regulator, such as the Financial Crimes Enforcement Network, FinCEN as it’s better known. These reports become part of a law enforcement database to help identify financial crimes and catch the criminals responsible.
But could that work with video games? And moreover, what responsibility should video game developers and publishers share for crimes committed using their platforms and economies? What about the informal or other marketplaces where deals are advertised and made?
These questions, unfortunately, would have to ultimately be asked by legislatures — and given legislatures’ historically laughable understanding of how the Internet, video games, or virtual economies work, would likely end up with a solution that would damper the video game industry as a whole.
The ideal solution would be for game makers to police themselves — but these companies are experts in game design, marketing, and computer science — not financial crimes. Maintaining an effective AML program can also be expensive. Companies have to hire expert staff, invest in technology, and at the same time may force the company to pass up on lucrative opportunities that have too great a potential to be abused.
What Can You Do?
As a player, what can you do to make sure you’re not helping criminals launder money or fund other illicit activities? This may sound like a pitch from a health food company, but only buy from known sources. If you must buy V-bucks, keys, or other premium currency – stick with the original source. Avoid secondary markets where possible. You don’t know if the items are coming from ruthless gold farms, launderers trying to pass off illicit money as legal, or a legitimate seller.
As our economies become increasingly virtual and games continue to develop their own economies, we need to pause and ensure that we’re investing our time and money ethically.