crime and addictions tools for on line gaming fraudster, whales in online games

1. FINANCIAL CRIME ON INTERNET GAMING
INTERNET ADDICTS AS VICTIMS
MILEN SANTIAGO RAMOS
CLINICAL PSYCHOLOGY _NEUROSCIENCE_CRIMINOLOGY
PHILIPPINES

2. WHAT ARE THE MAIN TYPES OF FINANCIAL
CRIME ?
fraud.
electronic crime.
money laundering.
terrorist financing.
bribery and corruption.
market abuse and insider
dealing.
information security.

3. Who commits Financial Crime ?
There are essentially seven groups of people who commit the various types of financial
crime:
Organised criminals, including terrorist groups, are increasingly perpetrating large-
scale frauds to fund their operations.
Corrupt heads of state may use their position and powers to loot the coffers of their
(often impoverished) countries.
Business leaders or senior executives manipulate or misreport financial data in order
to misrepresent a company’s true financial position.
Employees from the most senior to the most junior steal company funds and other
assets.
From outside the company, fraud can be perpetrated by a customer, supplier,
contractor or by a person with no connection to the organisation.
Increasingly, the external fraudster is colluding with an employee to achieve bigger and
better results more easily.
Finally, the successful individual criminal, serial or opportunist fraudsters in
possession of their proceeds are a further group of people who have committed financial
crime.

4. Money laundering

5. PRECIPITANTS
“THIS AGE OF ‘MICRO-TRANSACTIONS’ HAS
GONE WAY TOO FAR. LEAVE IT TO EA TO
STRETCH THE BOUNDARIES.”
“SERIOUSLY? I PAID 80$ TO HAVE VADER
LOCKED?”
Star Wars Battlefront II. The game is an action shooter video
game that, at the core, pits you vs other players in huge
multiplayer battles. It lets you play as various normal
character classes AND as iconic Star Wars heroes.
FORMERLY A MARKETING GIMMICK OF ELECTRONIC ARTS, IN WHICH THEY TRIED TO IMITATE REAL-LIFE
SPORTS NETWORKS BY CALLING THEMSELVES THE "EA SPORTS NETWORK" (EASN) WITH PICTURES OR
ENDORSEMENTS WITH REAL COMMENTATORS SUCH AS JOHN MADDEN, IT SOON GREW UP TO BECOME A SUB-
LABEL ON ITS OWN, RELEASING GAME SERIES SUCH AS FIFA

6. MONEY LAUNDERING
IS THE ILLEGAL PROCESS OF CONCEALING THE
ORIGINS OF MONEY OBTAINED ILLEGALLY BY
PASSING IT THROUGH A COMPLEX SEQUENCE OF
BANKING TRANSFERS OR COMMERCIAL
TRANSACTIONS. THE OVERALL SCHEME OF THIS
PROCESS RETURNS THE MONEY TO THE
LAUNDERER IN AN OBSCURE AND INDIRECT
WAY. WIKIPEDIA

7. Money laundering in Online Games are
called MICROLAUNDERING
because MICROTRANSACTIONS is
being used

8. Microtransactions (someti
mes abbreviated as MTX)
are a business model where
users can purchase virtual
goods with micropayments.
Microtransactions are often
used in free-to-play games
to provide a revenue source
for the developers

9. Downloadable content (DLC) is additional content created for an
already released video game, distributed through the Internet by the
game's publisher. It is a form of video game monetization[1], enabling
the publisher to gain additional revenue from a title after it has been
purchased, often using some type of microtransaction system.
Downloadable content can be of several types, ranging from
aesthetic changes for a character, or new objects or challenges,
to expansion packs adding new levels, game modes or a whole new
storyline. Downloadable content became prevalent in the 21st
century, and especially with the proliferation of Internet-
enabled, sixth-generation video game consoles. It has become
common practice to re-release games in the form of special
editions incorporating previously released DLC along with the main
title.

11. Owen Mahoney
How Nexon accidentally invented
microtransactions.
Nexon's Owen Mahoney talks about how his company
treats microtransactions at GamesBeat 2015.
Headquartered in Japan, Nexon is a leader in the free-to-play gaming
industry, where games are free but developers offer in-app sales on items
such as a character’s armor upgrades or special abilities.
This was different than the Western approach, sometimes referred to as
“pay-to-win,” where developers encourage players to spend money to
boost their characters and move on to the next level.

12. Nexon invented free-to-play games when it was preparing to remove
one of its subscription titles because of a lack of players. The team
decided to give the game away for free and sell some in-game items
as an experiment. Shortly after, subscription membership
skyrocketed. In Q2 of 2015, Nexon reported a revenue of 42.66
billion yen, showing an increase of 16 percent over one year. Asia is
the leader in the free-to-play market, bringing in $4.2 billion in
revenues in 2015. North America and Europe come close behind with
$3.1 billion and $2.1 billion in revenues over the same year.
it didn’t start out as a monetization strategy or a business
strategy,”
Mahoney said. “It started out as an idea on how to help
your customers, or your gamers, to have more fun in the
game.”

13. THE “WHALES” OF THE SOCIAL-GAMING WORLD ARE THE
BIGGEST SPENDERS, THEY MAKE UP A TINY GROUP
(THINK ABOUT 2 PERCENT OF AUDIENCES) THAT DRIVES
MOST OF THE REVENUE FOR PUBLISHERS OF THESE
GAMES. BUT THE WORD “WHALE” ISN’T A FLATTERING
TERM, AND NEITHER ARE THE NUMBERS ASSOCIATED WITH
IT. THESE ARE PEOPLE, NOT JUST CUSTOMERS.

14. Today, the idea of a “whale” carries a different weight for each
company. 5th Planet Games, a developer of social games for
both casual and hardcore audiences, starts classifying its
players as whales when they spend $100 or more a month.
That’s a big jump from whales on Facebook, for instance, where
social gamers could drop $25 per month to meet the same
qualification.
5th Planet chief executive Robert Winkler revealed at the Game
Developers Conference Online in 2012 that with its game Clash
of the Dragons, 40 percent of revenue came from 2 percent of
players who spent $1,000 or more. Ninety percent came from
those who spent $100 or more, and the top whale had spent
$6,700.

15. How microtransactions
and in-game currencies
can be used to launder
money

16. CRIMINALS ARE USING FORTNITE TO LAUNDER MONEY
THE HUGELY POPULAR FORTNITE EARNED A WHOPPING $3 BILLION IN 2018 AND
ATTRACTED MORE THAN 200 MILLION PLAYERS WORLDWIDE. BUT FORTNITE
DEVELOPER EPIC GAMES ISN’T THE ONLY ONE MAKING MONEY OFF THE GAME.
CYBERCRIMINALS HAVE BEEN USING FORTNITE’S IN-GAME CURRENCY, V-BUCKS, TO
LAUNDER MONEY

17. There are three major steps involved in
micro-laundering:
Placement: Moving cash from its source
Layering: Making it difficult to detect and
uncover illicit funds
Integration: Moving cash back to the
launderer in a manner that makes it look
legitimate
Jean-Loup Richet, a cybercrime researcher and expert at Harvard University

18. The launderers’ modus operandi is simple (yet it leaves no trail for
law enforcement to follow):
• Launderers purchase credits (or gold, as gamers call them) on
online games; the purchase is made using pre-paid cards, or
stolen cards
• Once the gold is purchased, the launderer sets up shop on a gold-
selling site. These reseller sites, as it were, attract a large number
of gamers as the gold is often sold at a marked down price
• As with every other transaction on the site, a buyer purchases the
gold, and the launderer, in effect, cleans his illegally obtained
money.
• Neither the buyer nor the seller (the money launderer) are aware of
the other’s identity; in fact, they could be living in different and
distant parts of the world

19. JEAN-LOUP RICHET, A CYBERCRIME
RESEARCHER AND EXPERT AT HARVARD
UNIVERSITY
ACCORDING TO RICHET, MONEY
LAUNDERERS GRAVITATE TO ROLE-
PLAYING GAMES — PARTICULARLY THE
MASSIVELY MULTIPLAYER ONLINE ROLE-
PLAYING GAMES (MMORPGS) WHICH
HOST MILLIONS OF GAMERS. IN THE
PAPER, RICHET PROVIDES POPULAR
MMORPGS SUCH AS SECOND
LIFE, WORLD OF WARCRAFT, AS
EXAMPLES.

20. ON LINE GAMES DOES NOT
REQUIRE THEREFORE BECOMES
SAFER TO LAUNDER
Anti-Money Laundering (AML)
rules and Ultimate Beneficial
Ownership (UBO)
requirements,

21. Money laundering schemes using in-game purchases
Criminals have likely been using games and online worlds
like Second Life as a money laundering technique since
their inception in the early 2000s, partly because cash can
be paid into games, and later withdrawn as a transfer
directly into a bank account, giving scammers ‘clean’
cash and another layer of complexity between them and the
criminal source of their income.
Researchers have found that some fraudsters transfer their
in-game funds into cryptocurrencies, adding yet more
distance between their money and its source.

22. Kromtech’s Security researchers found that the
thieves were targeting three games,
Clash of Clans, Clash Royale and Marvel Contest
of Champions.
While these are all free-to-play games, they offer in-
game purchases for virtual currencies.
The card thieves create fake Apple and Google
accounts, and then pay for in-game currencies using
the stolen cards.
Rather than using the stolen cards to make large
purchases, the thieves can make many small orders,
accumulate lots of in-game money, and then sell the
game currencies in the market, for cash which they
can then exchange for Bitcoin.(cryptocurrencies

23. Fortnite‘s V-Bucks,
the virtual currency used in the massively popular
Battle Royale shooter to purchase outfits, weapons,
and other items, are apparently also being used by
criminals for money laundering schemes.
Criminals are buying V-Bucks from the
official Fortnite store using stolen credit card
information.
The V-Bucks are then sold in online black markets
at discounted rates to “clean” the money,
Cybersecurity firm Sixgill.

24. The discounted V-Bucks may be found for
sale on social media platforms such as
Instagram and Twitter,
but most of the money laundering happens on
the dark web, which is a part of the internet
that may only be accessed through special
software.
This is where a lot of illegal activity takes
place, and apparently, money laundering
through Fortnite‘s V-Bucks is now part of the
list.
Cybersecurity firm Sixgill.

25. Fortnite money launderers are also targeting unsuspecting regular players by
running scams on social media.
In the game, V-bucks can be bought in bundles to spend on outfits,
cosmetics, and other aesthetic attributes. They can’t be spent on
anything that would give a player a competitive advantage, and they
can’t be purchased outside of the official store.
Between September and October 2018, cybersecurity firm
Zerofox generated 53,000 alerts relating to Fortnite scams. Scammers
lure in players who are looking for cheaper ways to acquire V-bucks by
advertising “V-bucks generators” and asking players for personal
information, such as Fortnite usernames and passwords and credit
card information. Although Fortnite’s age requirement is 12, younger
children are reported to play the game. Zerofox warns that they are
more likely to fall victims to scams—especially if their parents won’t
give them money for the game.

27. A joint investigation by the Independent and
Sixgill, a cybersecurity firm, uncovered
Fortnite money laundering operations
around the globe, being conducted in
Chinese, Arabic, Spanish, Russian, and
English. Sixgill also found that Fortnite items
took in more than $250,000 on eBay over a
60-day period last year, although exactly how
much criminals are profiting from the scheme
is unclear.

28. World of Warcraft,
GTA 5,
Fifa,
and
Minecraft
Are other online games
targeted by cybercriminals
to do money laundering

29. “Gamers must be made aware of
the crucial role they have in
cybercrime whenever they take part
in the exchange of online gaming
currencies.
Denial of service attacks, identity
theft, and financial fraud are just a
few of the attacks that have been
funded by the sale of online gaming
currencies and have devastated
companies and organizations of all
sizes.”
Trend Micro

30. There are several ways for criminals to obtain
large amounts of in-game currency.
They can exploit accounts by infecting
computers with malware to steal login
credentials.
Another way is to purchase in-game currencies
with stolen financial information such as credit
cards or PayPal accounts.
All of this information is available for purchase
on the deep web

31. Loot box
One controversial form of microtransaction is the loot box. A loot
box is basically an in-game treasure chest that can be redeemed
for a chance at winning one of several randomly selected virtual
items. Some of the items are more valuable than others because
it is more powerful, looks cool, or just because of the rarity itself.
It’s analogous to purchasing a pack of Magic the Gathering or
Pokémon cards, hoping one of them will be the rare card that
gives you the edge over your opponents. Some people think this
is tantamount to gambling as people can and will spend a large
amount of money (sometimes in the hundreds of dollars) in order
to maximize their chances of getting the shiny new weapon or
Pokémon.

32. REGULATION
Senate Bill Could Mean Game Over For
Microtransactions And Loot Boxes
It's possible that the public will do a better and faster
job at fixing the problem.
By STEVEN CHUNG
May 29, 2019 at 1:14 PM

33. Senator Josh Hawley (R-Mo.) introduced
the Protecting Children from Abusive Games
Act, a bill that bans “pay-to-win”
microtransactions and loot boxes in games
geared toward children.

34. According to the bill, a pay-to-win microtransaction in a typical video
game is defined as an in-game transaction that
1) helps a player progress through the game;
2) 2) helps a player accomplish an achievement in the game
3) helps a player receive an award in the game; or
4) permits the player to continue to play the game after the expiration
of a timer or a number of gameplay attempts.
In a competitive game, a pay-to-win microtransaction is defined as an
in-game transaction that gives a player a competitive advantage over
others.
The bill provides some exclusions to the ban.
Microtransactions will be allowed for accessing more difficult content,
additional game content, and for cosmetic in-game improvements. So
this means that in-game expansion packs, and alternate character
costumes are safe.

35. Sen. Josh Hawley (R-MO) announced that he would be introducing
a bill banning “manipulative” design features in video games with
underage audiences, including the sale of loot boxes.
The legislation would, if approved, prohibit the sale of loot boxes in
games targeted at children under the age of 18.
Games marketed toward wider audiences could also face penalties
from regulators like the Federal Trade Commission if companies
knowingly allow children to purchase these randomized crates.
State attorneys general would also be empowered under these new
rules to file suits against gaming companies on behalf of the
residents of their states on issues like loot box sales.

36. Social media and video games prey on user addiction,
siphoning our kids’ attention from the real world and
extracting profits from fostering compulsive habits,”
Hawley said. “No matter this business model’s
advantages to the tech industry, one thing is clear: there
is no excuse for exploiting children through such
practices.”
“WHEN A GAME IS DESIGNED FOR KIDS, GAME
DEVELOPERS SHOULDN’T BE ALLOWED TO
MONETIZE ADDICTION.”
And when kids play games designed for adults, they
should be walled off from compulsive microtransactions.
Game developers who knowingly exploit children should
face legal consequences.

37. Belgian Gaming Commission ruled that
loot boxes fall under the jurisdiction of
its gambling laws. Concern spread
across Europe, and this pushed
studios like Blizzard and EA to pull the
sale of loot boxes from their games in
those countries.

38. Hawaiian state representative Chris Lee recently held a
press conference where he characterized loot boxes as
“predatory gaming,” and is working on legislation to ban
minors from buying them. He later added in a Reddit
post that “these kinds of loot boxes and
microtransactions are explicitly designed to prey upon
and exploit human psychology in the same way casino
games are so designed.”
In Australia, a regulator for the state of
Victoria agreed that “what occurs with ‘loot boxes’ does
constitute gambling” and that the regulatory body for
gaming was "engaging with interstate and international
counterparts" on policy changes

39. AML in the Philippines was established to prevent
money laundering. The country created an Anti-
Money Laundering Council (AMLC) to ensure that
the Anti-Money Laundering Act (AMLA) is being
observed by those within the financial industry
The law also ensures that the country will
cooperate with other countries, with the United
Nations, and other international bodies for
investigation of money laundering offenses, or
even cases where laundered money is used for
financing terrorism.
The “covered transaction” is usually a single or
combination of transactions that will total in the
amount of 4 million pesos (or equivalent amount
in foreign currency).

40. Adherence to AML Law (and KYC Laws) is also the
reason why blockchain and crypto wallet apps,
particularly those whose business are mainly in the
Philippines, require multiple stages of verification.
Let’s take Coins.ph as an example. In its first limit (Level
1), you can cash in up to Php 2,00 but cannot cash out.
Level 2 users can cash in and out up to Php 50,000
monthly, but that requires at least 3 verifications – phone
verification, identity verification, and selfie verification. A
level 3 user can cash in up to 400,000 monthly with
unlimited cash out, but you will need to verify your
address.

41. Who will be held liable is any person who has
knowledge of such activity and failed to disclose it to the
AMLC.
In 2016, the bank RCBC was involved in a complicated
series of events that led to money being laundered from
Bangladesh into the Philippines through one of its
branches.
In 2017, the AMLC reported that around Php 10.2 billion
worth of funds were laundered to the Philippines from
2015 – 2017.
according to AMLC Resolution no. 107, covered
institutions must report suspicious transactions in 10
days upon discovery of the said transaction.
As of April 2018, the AMLC has secured more than 90
convictions for money laundering offense.

42. INFOGRAPHICS ABOUT PHILIPPINE
ONLINE GAMING

46. May 2017, a university in Philippines located in
Cebu set to open up school for DOTA 2, and this
is the University of the Visayas New School of
Art and Design (UVNS) which can be found in
Gov. M. Cuenco Ave, Mandaue City, Cebu
The DOTA 2 course is to senior high track for
arts and design, which is game design. The
students can either focus on e-sports or game
development.