Virtual worlds 'should be regulated'

Anti-fraud experts are calling on the government to start taking the likes of Second Life seriously by extending real-world regulation into the virtual world.

Players of Second Life, and members of any other online virtual community, are at a growing risk from theft, deception and financial fraud, according to the UK’s Fraud Advisory Panel.

In a report released last week, the watchdog warned that participants of online communities could transfer large amounts of money with little risk of detection or consequence.

New virtual opportunities like starting a business, which run off the appeal of converting in–game dollars into real currencies, increase the risk of money laundering via false identities.

According to the Panel, the government must ensure that funds exchanged in this way count “as genuine financial instruments covered by existing laws and regulations.”

Imported regulations should also mitigate other risks, identified by the group as identity fraud - through hacking, credit card fraud and even tax evasion.

“That’s the key to successful crime prevention in this evolving area” said Steven Philippsohn, chairman of the FAP’s cyber crime working group.

“Such communities are not just chat rooms, they are also lucrative and growing marketplaces. Members use these interactive sites to buy and sell tangible goods and services such as land and property, clothing, music and bookmaking.

“But there’s nothing virtual about online crime, it’s all too real. It is time government took this seriously”

Yesterday, the government was reported to be considering the Panel’s report: a Treasury spokesman told The Daily Telegraph that the government is committed to tackling “all forms of financial crime.”

Meanwhile, Linden Labs, makers of Second Life, have announced the beta testing of an age and identity system, which will provide one-time proof of identity when players log-in.

The announcement came four days after the FAP’s report and 24 hours after the US firm was contacted by a German media outlet, claiming Second Life was being targeted by a child porn ring.

The criminal activity, which resulted in the banning of two players, supports the FAP’s analysis, which warns of how “virtual communities can…be used by organised gangs intent on avoiding surveillance.”

Mr Philippsohn reflected: “The legitimate benefits of virtual communities will prove enormous but people need to be aware that this cutting edge technology has a darker side.”



 

17th May 2007

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