The methods for money laundering are always evolving to easily convert illicit money into white. The traditional money laundering methods are not used by criminals due to KYC and AML security. Know Your Customer and Anti Money Laundering compliance has made illicit cash flows very difficult. Now money launderers are seeking more specific ways like digital platforms. Cryptocurrency, freelancing, and online gaming platforms are used in the modern era by launderers. These platforms have less scrutiny and the users registered on them are not verified. The ease of being undercover with very little chance successfully prosecuted fascinates the illegal practitioner towards itself.
AML security in the Gaming Industry
The online gaming industry’s revenue is increasing by every year. The involvement of heavy money in it through jackpots and prize money has made it a separate industry. According to a report by Newzoo, in 2019the worldwide gaming market generated 152.1 billion US dollars.
Despite entertainment and fun, online gaming is also used for money laundering. The poor transaction monitoring of AML security has made money laundering a bit easy. Gamers purchase gaming items from actual and virtual money. For instance, gamers purchase weapons, outfits, and special gameplay environments to enjoy more gaming services. This sal-purchase has faced many scams and frauds in the past but now it is used as ghost shipments. Money launderers buy fake gaming services, pay the amount and transfer money from one state to another.
Another money laundering is by account takeovers like when a user buys weapons while playing a game, he gives his personal and credit card information. The information can be used for account takeovers, the money launderers might use this account information for illegal practices. It is easy to launder money from stolen accounts because in this case, all the penalties will be on the real user, and the actual criminal walks out smoothly.
Money Laundering is done in three stages, let’s understand the concept from the perspective of the gaming industry:
The money is transferred to the gaming accounts. Most games do not set any limit on the money. This stage becomes easy because it archives the goal of placement of black money in the financial system.
The money placed in the gaming accounts is then revolved through gameplays like faking win or lose situations. Fraudsters fake winning and losing situations to easily transfer money from one account to another or sell the account to another money mule.
This stage gives the money with a legal source to the ultimate beneficial owner. After several financial cycles, the owner can transfer the money to his bank account in a legitimate way.
The primary objective of AML security is to stop the illegal inter-state transfer of money. But gaming platforms are crossborder with very little that makes AML security very complex. There are no local or international monitoring authorities that overwatch gaming transactions. Plus virtual currency is also used for in-game purchases that also have no monitoring policy. Although it is debated about the use of convertible and non-convertible digital currency. But FATF confirmed that the non-convertible might be used in the black market. The AML security checks need to be more solid to counter money laundering and terror financing.
Know Your Player
The identification and verification of a player in the Know Your Customer Industry are known as Know Your Player. Whenever a player tries to play a game that has money involved in it should be verified. The identity of the player through his government-issued
Identity documents like ID card, Driving Licence, or Passport. After verification, the name of the player should be screened through the Politically Exposed Persons (PEPs) list, sanction lists, and criminal records of governments and international monitoring authorities.
Another significant action is to stop the direct transfer of money for one customer to enter. The aml screening can be done by AML security software that can screen a player name in seconds. There should be some bank or other monitoring institution to verify the financial transaction.
Here are some money laundering scales in some countries
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The above discussion about AML security can ensure the transfer of money by only legitimate ways in the gaming platform. All the gaming platforms should adopt KYC and AML compliance, it gives a safer environment for users’ data and their money. Also if there is any monitoring author of the gaming industry in the future, the gaming platform can comply with their KYC and AML directives before time.