Apr 07 2008 Brett Wolf
Despite concerns voiced by some experts, the virtual world known as Second Life does not offer money launderers any significant opportunities and is capable of policing itself. That is the message that Second Life's founder, Philip Rosedale, delivered during a hearing before the US House of Representatives Energy and Commerce subcommittee on telecommunications and the Internet.
So-called "persistent virtual worlds" such as Second Life are simulated online environments in which participants create personae known as avatars. These characters — complete with names and animated "bodies" — are able to interact with one another on real-life participants' computers 24 hours a day, seven days a week.
Although most avatar interaction involves "combat" or completion of various challenges, players also are able to conduct real-money transactions to purchase virtual clothing and other items for their avatars, as well as pay for entry into restricted events. This currency exchange, which is global in scope, poses a money laundering risk, according to some experts.
Players of Second Life generally purchase the game's "Linden Dollars" through a credit or debit card or PayPal, Rosedale told the House subcommittee. He added that users who sell Linden Dollars on the LindeX "virtual currency" exchange can then receive payment through PayPal only after "passing through verifiers and fraud tools designed to detect suspicious transaction patterns."
"We have a large team dedicated to dealing with fraud and abuse, and we have systems in place that make it extremely difficult to engage in money laundering," Rosedale said. "The result is that using the LindeX exchange as a money laundering or fraud conduit would be extremely difficult."
Still, some technology wizards claim that the money laundering risks posed by virtual worlds such as Second Life are very real. None of these critics was on hand to testify during the subcommittee hearing. As Complinet has reported, however, technology security firm Symantec recently issued a report pinpointing such risks.
Symantec argued that financial transactions carried out in games such as Second Life gave rise to a de facto international monetary system. It added that these "secondary economies" are unregulated and are still too small to attract serious attention from law enforcement and securities regulators.
Still, it seems that regulation is unlikely to appear. The subcommittee made it clear that the hearing's purpose was to gather information — not plan a new law.
