2012-08-15 computerworld.com.au - Money laundering using virtual worlds, Bitcoin

[julz]

Money laundering using virtual worlds, Bitcoin on watchdog's radar
Financial watchdog AUSTRAC says that money laundering using virtual worlds, such as MMOs, and digital currencies, such as Bitcoin, are emerging threats

Rohan Pearche
2012-08-15

http://www.computerworld.com.au/article/433634/money_laundering_using_virtual_worlds_bitcoin_watchdog_radar/

...
Bitcoin is by far the best known purely digital currency.

...
"AUSTRAC is aware that digital currencies, such as those offered by Bitcoin, may become more attractive to criminal groups, particularly in response to tighter regulation and monitoring of established or traditional financial channels by both government and the traditional financial service providers themselves," Schmidt says.

As a result, AUSTRAC and other law enforcement organisations "actively monitor developments across the range of digital currencies currently available in Australia".
...

...
Existing money laundering legislation can generally be used to prosecute the use of virtual worlds and digital currencies for financial crimes, Dyson says. "We have legislation in relation to the offences being committed online; of course the proceeds that they’re after is the reward at the end... Current anti-laundering legislation could cover it if the objective is to gain legitimate forms of currency at the end."
...

That's an interesting 'if'.  In future, the objective may be to spend directly in BTC.
The implication that bitcoin might not be a 'legitimate form of currency' sounds premature too. It may not be considered a 'currency' - but what is illegitimate about it?

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[TraderTimm]

By the time these idiot governments figure it all out, we'll be long past the point where 'cashing out' to other currencies will even be on the table. I sincerely believe that any regulation will just force more activity into bitcoin.

[Stephen Gornick]

Here's the 100 page AUSTRAC report:

 - http://www.austrac.gov.au/files/typ_rprt12_full.pdf

[repentance]

Money laundering using virtual worlds, Bitcoin on watchdog's radar
Financial watchdog AUSTRAC says that money laundering using virtual worlds, such as MMOs, and digital currencies, such as Bitcoin, are emerging threats

Rohan Pearche
2012-08-15

http://www.computerworld.com.au/article/433634/money_laundering_using_virtual_worlds_bitcoin_watchdog_radar/

...
Bitcoin is by far the best known purely digital currency.

...
"AUSTRAC is aware that digital currencies, such as those offered by Bitcoin, may become more attractive to criminal groups, particularly in response to tighter regulation and monitoring of established or traditional financial channels by both government and the traditional financial service providers themselves," Schmidt says.

As a result, AUSTRAC and other law enforcement organisations "actively monitor developments across the range of digital currencies currently available in Australia".
...

...
Existing money laundering legislation can generally be used to prosecute the use of virtual worlds and digital currencies for financial crimes, Dyson says. "We have legislation in relation to the offences being committed online; of course the proceeds that they’re after is the reward at the end... Current anti-laundering legislation could cover it if the objective is to gain legitimate forms of currency at the end."
...

That's an interesting 'if'.  In future, the objective may be to spend directly in BTC.
The implication that bitcoin might not be a 'legitimate form of currency' sounds premature too. It may not be considered a 'currency' - but what is illegitimate about it?

It doesn't even have to be converted into currency at the end.  Conventional money-laundering often involves purchasing high value items with laundered funds so existing legislation would almost certainly cover BTC being used that way.  Jewellers and bullion dealers are reporting entities in Australia because they sell goods which can easily be used to obscure a money trail and gems and gold can be traded for other items without being converted to cash.  Australia has a specific definition for "e-currency" but that definition allows for emerging technologies to be added to that category.

[matonis]

Summary from Australian Blogger:

http://barnoldlaw.blogspot.com/2012/07/washing.html

[Stephen Gornick]

The most useful take away from the article, for me?

In Q2 of 2011, the total amount of Linden Dollars held by Second Life users was in the region of US$30 million

For some reason I thought it was more.

[kwukduck]

What a demotivating read, getting kinda tired of all these videos and articles popping up, just stating that bitcoin is 'the digital currency created by hackers for criminal activities'...
Is this the beginning of the third part of the  "first they ignore you, then they laugh at you, then they fight you, then you win" scenario?

[Bitcoin Oz]

Summary from Australian Blogger:

http://barnoldlaw.blogspot.com/2012/07/washing.html

I lol'd when I read this part -

such as Bitcoins, SolidCoins and Linden dollars

[cbeast]

the FATF estimates that the cost of money laundering and the underlying crime is two to five per cent of global GDP.

If the entire Bitcoin market were used for money laundering (which it is not) it would account for 0.0003%. It's more likely to be far less than that.

[nevafuse]

This article really emphasizes the importance of keeping exchanges up & running as long as possible.  I honestly didn't think governments were this far along with tracking bitcoin.  I thought we were limping along as "they aren't even worth talking about."  If wikileaks can be cut off from all major funding sources then so can mtgox.  And a blow to one of the largest exchanges would definitely cripple bitcoin in the short term.  I'm hoping wikileaks was cut off a little premature because it wasn't really a business the government could play along with.  At least bitcoin gives everyone (including government employees) the ability to participate in sensitive activities.  This selfishness may be the only reason we will last long enough until it is too late for them to save the only reason they are in power to start with - money control.

[kiba]

This article really emphasizes the importance of keeping exchanges up & running as long as possible.  I honestly didn't think governments were this far along with tracking bitcoin.  I thought we were limping along as "they aren't even worth talking about."  If wikileaks can be cut off from all major funding sources then so can mtgox.  And a blow to one of the largest exchanges would definitely cripple bitcoin in the short term.  I'm hoping wikileaks was cut off a little premature because it wasn't really a business the government could play along with.  At least bitcoin gives everyone (including government employees) the ability to participate in sensitive activities.  This selfishness may be the only reason we will last long enough until it is too late for them to save the only reason they are in power to start with - money control.

Different part of the government cares for different things.

For example, CIA would love bitcoin because it would be able to launder money more easily for secret operations.