The technological revolution has transformed modern gaming platforms for existing players and attracted new gamers worldwide. Moreover, the introduction of new products and payment options has increased the risk of external attacks from cybercriminals. During the pandemic era, gaming platforms experienced a lot of online traffic which increased their financial worth in the market. The change also attracted the attention of global regulatory bodies to emphasize the importance of KYC/AML regulations. Fraudsters not only target publishers but also genuine players to accomplish their malicious objectives. Hence, the use of gaming verification can help the esports sector in combating fraud cases.
Financial Crimes & Digital Gaming Industry: Gaining Insight
Emerging digital innovations in the market and implementing sophisticated solutions can help the gaming industry fight fraud on their platforms. This guides game developers, service providers, and players to take security measures seriously.
A major factor that supports money laundering and identity theft is the availability of in-game items that have real-life value outside the gaming platform. This comprises certain artefacts that provide additional powers to avatars (e.g., magic potions) or currency that can be used to buy these bonuses.
Microtransactions & the Rise of Fraud
In addition, some games enable players to buy and sell in-game products using government-issued currency or cryptocurrencies. This approach is called microtransactions. This feature is especially common in freely available games that have paid-in-game services. For instance, Second Life and Entropia Universe have official online stores that facilitate in-game purchases. Moreover, several games implement gambling-style microtransactions by offering loot boxes.
Unfortunately, there are no clear standards for the conduct of gaming service providers regarding dealing with criminal behaviour. This is because esports is not properly regulated in various regions. In this way, some service providers may feel motivated to use unlawful income for their purposes. This is where the implementation of gaming verification is important to discourage criminal activities.
Sixgill & The Cases of Money Laundering
Sixgill, a cyber security agency, published research on money laundering with the help of V-bucks. As per the survey, money launderers were purchasing V-bucks from the online Fortnite store with stolen credit/debit cards, offering them at a discount to other players on the dark web. Likewise, other financial crimes report highlighted that organized crime groups automated the use of stolen card details for creating a large dataset of fake Apple IDs. The purpose behind purchasing in-game items was to resell them on third-party websites.
In this way, buying special products with stolen card data is just like purchasing real-life goods. This is where the payment service providers have the responsibility for highlighting and deterring fraudulent activity. Using gaming verification services can facilitate authorities in exposing criminal networks.
BSP Warns Genuine Players about Fraud Cases
The Central Bank of the Philippines (BoP) has issued a public warning about the rising cases of financial fraud in the gaming industry, especially in play-to-earn online games. All financial organizations have highlighted such types of service providers as high-risk entities. They facilitate criminals in carrying out money laundering and other monetary crimes.
According to the reports, the Bangko Sentral ng Pilipinas (BSP) warns players about fraud cases because the digital space offers a wider playing field for cybercriminals to accomplish their malicious goals. Additionally, the central bank authorities have also said that such types of platforms are popular among the locals, even though they are non-compliant with regulations. On online platforms, digital token transactions provide anonymity and do not come under global regulatory standards. Such types of incidents show the significance of executing gaming verification services for effective fraud prevention.
Understanding the Significance of Global Regulations
The online gaming industry has been under a negative influence because of financial crimes, such as money laundering and terrorism financing. For this reason, the sector must opt for gaming verification solutions to ensure online gaming safety under a regulatory obligation. The purpose is to secure the service providers against external attacks.
The standards for gaming service providers are similar to virtual currency exchange. Digital currency transactions, unlike esports enterprises, must follow Anti-Money Laundering/Counter-Terrorist Financing (AML/CTF) guidelines. This step is in harmony with the latest modification of the Financial Action Task Force (FATF) Recommendations. Corporations under supervision must ensure customer ID verification, observe their activities, and report any suspicious behaviours to authorities immediately. Utilizing gaming verification services can help companies in showing compliance with regulatory standards.
Mitigating the rising financial cases in the online gaming industry is important to ensure the safety of genuine players. Prevailing criminal activities not only damage businesses’ market reputation but also decrease the annual profit. Artificial Intelligence (AI) and Machine Learning (ML) models integrated with gaming verification services to ensure online gaming safety and AML screening systems help service providers fight ID theft, money laundering, and terrorism financing cases.
Digital service providers with the help of AI-driven solutions can easily monitor gamers’ behavioural patterns, identify cheaters, and prevent perpetrators from exploiting the systems. Thereupon, the only efficient way of dealing with fraud is the application of gaming verification solutions.