Fraud watchdog calls on government to extend legislation to virtual money

Fraud watchdog calls on government to extend legislation to virtual money

Governments need to extend existing financial legislation and regulations into Web-based virtual communities which are experiencing rising levels of real-life crime, says the UK's Fraud Advisory Panel.

Legal loopholes are exposing virtual worlds to a growing risk of theft and deception, says the panel - a spin-off from the Institute of Chartered Accountants in England and Wales (ICAEW). It highlights several problem areas including credit card fraud, ID theft, money laundering, tax evasion and unregulated cross-border fund transfers and sales of age-restricted goods and services to minors.

The communities can also be used by organised gangs intent on avoiding surveillance.

The panel is now calling for the UK government to ensure that the virtual funds exchanged in online communities count as genuine financial instruments covered by existing laws and regulations.

Steven Philippsohn, chairman of the panel's cyber crime working group, argues that online communities are not just chat rooms, they are also lucrative and growing marketplaces that are used to buy and sell tangible goods and services.

"There's nothing virtual about online crime, it's all too real. It is time government took this seriously," adds Philippsohn.

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