The US Department of Justice has indicted the operators of the E-Gold digital cash transfer system on charges of money laundering, conspiracy, and operating an unlicensed money transmitting business.
The DoJ has also obtained a restraining order on the three defendants named in the indictment to prevent the dissipation of assets, and 24 seizure warrants on over 58 accounts believed to be property involved in money laundering. The restraining order does not limit the E-Gold operation's ability to use its existing funds to sell precious metals for conversion into national currency for customers of non-seized accounts, says the DoJ.
Persons seeking to use the E-Gold payment system - which is purportedly backed by stored physical gold - are only required to provide a valid e-mail address to open an account, states the DoJ. Once open and funded, account holders can access their accounts through the Internet and conduct anonymous transactions with other parties anywhere in the world.
The indictment alleges that E-Gold became a favoured method of payment by operators of investment scams, credit card and identity fraud, and sellers of online child pornography and that the defendants conducted funds transfers on behalf of their customers, knowing that the funds involved were the proceeds of unlawful activity and thereby violated federal money laundering statutes. The indictment further alleges that the defendants operated the E-Gold operation without a license in the District of Columbia in violation of federal and state money transmitting laws.
The charges follow a two and a half year investigation by the US Secret Service into the E-Gold system. US attorney Jeffrey Taylor for the District of Columbia, describes E-Gold as a sophisticated and widespread international money remitting business, unsupervised and unregulated by any entity in the world, which allowed for anonymous transfers of value at a click of a mouse.
"Not surprisingly, criminals of every stripe gravitated to E-Gold as a place to move their money with impunity," he says. "As alleged in the indictment, the defendants in this case knowingly allowed them to do so and profited from their crimes."
James Finch, of the FBI's cyber division points to the development of new digital cash transfer businesses as an emerging area for criminal investigators. "The advent of new electronic currency systems increases the risk that criminals, and possibly terrorists, will exploit these systems to launder money and transfer funds globally to avoid law enforcement scrutiny and circumvent banking regulations and reporting," he says.