Video Game Marketplaces Can Draw Money Launderers Too: FT
03 Jan 2020

Recent research and corporate disclosures have highlighted the fact that video games aren’t only for entertainment. They can also serve as a medium for money laundering, the Financial Times reported Thursday.

A report published in October by RUSI noted the video-game marketplaces involve the exchange of virtual artefacts and currencies that have real-life values and can thus be used to move criminal proceeds. Later that month, Seattle-based video game developer Valve disclosed that it would no longer permit the trade of “container keys” in the game Counter-Strike: Global Offensive (CS:GO) after determining that criminals were exploiting the virtual market for them.

“Worldwide fraud networks have recently shifted to using CS:GO keys to liquidate their gains,” Valve said in the statement. “At this point, nearly all key purchases that end up being traded or sold on the marketplace are believed to be fraud-sourced.”

“It was shocking to me to see the language they were using,” Kayla Izenman, a research analyst at RUSI who contributed to the think tank’s report, told the Financial Times.

Valve’s disclosure signaled that criminals can exploit video-game marketplaces much as they might goods in a real-life trade-based money laundering scheme: by buying virtual items with illicit funds and then selling those items to unwitting third parties, often at a discount.

An investigation last year into the popular game Fortnite found that its in-game currency was being sold on the dark web while hundreds of thousands of dollars’ worth of Fortnite items were traded on eBay, the Financial Times reported.

Money launderers are mostly likely to gravitate toward CS:GO creator Valve and similar companies that offer relatively more in-game marketplaces than their competitors, Nicholas Lovell, game director at developer Electric Square, told the news outlet.

“Valve is at the core of this problem because so many of their games have a tradeable economy at the heart of them,” Lovell told the FT. “To me, Valve is a cautionary tale of what happens when you let people do whatever they like within a free-market economy. It turns out bad guys take it over.”

But while video game companies have access to substantial data on their customers and related transactions, the businesses are not subject to anti-money laundering and know-your-customer regulations that apply to payment processors, the Financial Times reported.

RiskScreen: Eliminating Financial Crime with Smart Technology

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