Online Gaming Industry: Involvement In Money Laundering

For years, users have laundered money using online games by buying virtual money using stolen credit cards and then selling the sum to the players at a discounted price.

Digital games were introduced with the purpose of entertainment and social activity but the platform failed to cover the objective and is used in multiple money laundering and financial crime activities. For years, users have laundered money using online game currency. In March 2023, a proposal was issued to a San Francisco federal court that declared that Roblox, an online video gaming site, had a money laundering case. According to a recent court filing, more than 300 users are claimed to have laundered money by buying fake in-game items using in-game currency. It has been found that they seem to use the Roblox system to transfer funds between each other by buying fake digital products. Also, some data that has been gathered suggests that most of the users are kids who are scamming each other out of items with in-game value which then can be sold for real money. Thus, the online video gaming industry is facing increased money laundering challenges as criminals have shown high interest in moving illicit funds through virtual currencies and in-game items. Due to the anonymity and global reach of the internet, it is a desirable means for money launderers as they can transfer money from one country to another using various financial systems with minimal effort. Another aspect is the absence of global regulation and strict oversight of virtual currencies and video games, which gives money launderers opportunities to operate openly in these places. This article will highlight multiple ways utilized by criminals to launder money through online gaming.

Now you must be worried about how to stop this crime!

Stay calm and continue reading because we will also discuss the essentials of sanction screening solutions to fight against any digital gaming money laundering fraud. We will also recommend a reliable screening platform to get additional help for fraud assessment and mitigation services.

What Is Online Gaming?

Online gaming is defined as playing gaming activities over the internet, involving mobile apps and websites. The different jurisdictions use different legislative terms but this kind of activity is known as online gaming or playing digitally.

How Online Gaming Industry Promote Money Laundering Activities?

In 2022, the global digital gaming market had a value of $184 billion, and experts predict that the market will keep growing annually by 4.1 percent and reach a size of $254.6 billion from 2023 to 2030, as stated in a report by research and markets. The combination of the use of in-game convertible and nonconvertible currencies and anonymity in the online video game industry has created a situation that is prone to criminal acts. Such crimes and money laundering plots usually start with the criminals stealing credit card data and information from other customers and external sources. These compromised credit cards are then used to buy in-game currencies and other digital products via microtransactions or buying loot boxes.

Other techniques used to launder money and conduct criminal activities are:

• Buying in-game assets or virtual currencies with illegal money and reselling on third-party marketplaces for a profit.
• Transferring using cryptocurrency and in-game items to get real goods or services, like weapons, luxury items, drugs, or illegal items.
• Duplicating a character in a game to exchange either the in-game currency or the items in and out of it.
• Betting in online games that use virtual currency or in-game items.
• Using a game to make imaginary or fake products and selling them to other players.

The concept of online gaming money laundering is cleared now, lets roam further in this realm to get professional knowledge on how to reduce and end such financial crimes.

How Will AML Screening Reduce Money Laundering Fraud In The Online Gaming Industry?

AML screening is one of the important elements in fighting financial fraud in online gaming by making sure the companies abide by the regulatory requirements and support in preventing money laundering crimes.

These sanction screening solutions can be effectively utilized to mitigate every risk by:

• Identifying High-Risk Players

It enables online gaming platforms to identify and ban players who are on international sanctions lists and watchlists or who have been flagged for any other type of financial crime. With the use of these lists, the platforms will pre-screen players before they are allowed to register, deposit, and withdraw their winnings in the event of any illegal activities perpetrated either by the players or by the platform itself.

• Compliance With Regulatory Requirements

Regulatory bodies globally have AML and unlawful bidding control requirements for the online games industry which include international sanction screening. Effective screening processes are implemented by the gaming platforms to make sure that they are in line with these regulations; they would otherwise be penalized through fines.

• Preventing Financial Crimes

Through the detection and blocking of transactions with individuals or entities on sanctions lists, online gaming companies minimize the chances of illicit activities like money laundering or terrorist financing on their sites. This comprises stopping sanctioned persons from placing funds that may be regarded as ill-gotten, or from using the gaming platform for money laundering.

• Improving Due Diligence Processes

Compliance screening, or sanction screening, is part of a broader due diligence process that involves customer identity verification, screening, as well as evaluating their risk profiles. EDD can be implemented for high-risk customers detected after the sanction screening process, which further aims to perform closer monitoring of their transactions and gambling patterns.

• International Cooperation

Sanctions lists are maintained by different international organizations and governments such as the United Nations, The European Union, and The US Treasury Department’s Office Of Foreign Assets Control. Screening against these lists can prevent the unintended facilitation of activities subject to international sanctions by the online gaming industry.

• Automated Screening Solutions

Technological advances have made possible development of the automated sanction screening systems that can quickly and effectively throughput volumes of players against various sanction lists in real-time. This simplifies processes of manual compliance a lot and also significantly lowers the risk of any human error.

• Reputation Management

Linking to sanctioned persons and entities as well as doing business with them can harm the reputation of a company and its connections with its customers and business partners. Reliable AML screening protects the platform’s good reputation by showing the willingness to confront any financial criminal activities.

• Ongoing Monitoring:

Sanction screening is a never-ending activity that has to be done consistently to ensure all individuals and entities that have been newly added to the list are revealed promptly and appropriate actions are taken. This 24/7 watch-over makes online gaming platforms react quickly to the new risk environment.

It would be wise to say that AML sanction screening is an essential means that online gaming platforms wield in their armory to prevent AML fraud. It enables the detection of high-risk players, adherence to regulatory readiness, protection of the platform’s reputation, and contributes to the worldwide fight against financial crimes.

Are you in search to find a reliable platform to get quick sanction screening solutions; don’t worry, we’ll introduce here the most efficient and trustworthy screening platform; AML Watcher.

How AML Watcher will minimize money laundering risk for the gaming industry

AML Watcher is the growing money laundering screening platform that provides comprehensive sanction, Watchlist, and PEP screening that generates real-time risk scores to effectively incorporate complete risk reports with your automated compliance operations. Measure risk linked to countless entities subject to multiple sanctions across 235 countries. Get the most recent and trustworthy information from 60,000 plus data sources that are directly received from official sources. Our AML screening software combats fraud in the online gaming industry through several key mechanisms, like:

• It matches customer names, against global watchlists, sanctions lists, PEPs, and other adverse media databases to ensure that customers do not undertake money laundering cases or red flagged.
• For high-risk customers, our software uses facial biometric screening checks, which provide exact matches if available and give accurate information for knowledgeable risk assessment.
• With real-time monitoring, it detects customers for any suspicious activity and generates alerts for their non-standard behavior, which may indicate money laundering.
• It is up-to-date with the recent gaming anti-money laundering regulatory needs and watchlist data sources from different countries, which ensures the gaming platforms are within jurisdictions’ compliance level.
• Our AML screening software can integrate with the existing gaming platforms, hence guaranteeing a streamlined customer experience and efficiency without compromising on customer experience.
• The software adjusts itself with the business, resulting in the continuous expansion of AML rules at par with the growth of the gaming platform and the user base who use it.
• Each individual or entity is given risk scores that are calculated based on different parameters, enabling customized screening intensity based on their risk profile.

To sum the digital game industry has witnessed the escalating of illegal conduct and money laundering in recent years. To minimize money laundering in the gaming industry, AML Watcher strives to offer quick and in-depth screening services. You can get real-time sanctions, PEP, watchlists, and adverse media screening against updated lists and databases thus, in turn, accelerating the prompt discovery of risk and adherence to regulatory demands. Implementing our smart screening solutions enables online gaming platforms to distinguish high-risk profiles before any important operations, screen customers for suspicious conduct, and suppress various fraud schemes.

Are you interested in sanction screening for your gaming company? To discover more about our screening solutions for the gaming industry, contact our experts now.