Over the course of the past few years, online gaming has seen an unprecedented surge in popularity. Along with the growing number of legitimate users, fraudsters and criminal organizations are becoming increasingly savvy in how they exploit online gaming platforms for numerous financial crime activities. In order to protect your online gaming platform from exploitation, it is more important than ever for gaming and gambling websites to employ the latest ID verification technology to protect against fraud and money laundering while also verifying players’ ages.
The Influx of Online Gaming
Regulators, policy makers, and online gaming service providers alike have good reason to worry as real-world currency is used more and more for hard-to-track in-game purchases. According to Statista, a leading business data site, the global online gaming market generated approximately 21.1 billion U.S. dollars in revenue for 2020 – a record 21.9 percent growth compared to the previous year. This boost was due in large part to the global pandemic, when many people were stuck at home and turned to digital entertainment and online social platforms to stay connected. Today, there are an estimated 1 billion online gamers worldwide, with China, South Korea, and Japan having the biggest online gaming communities. By 2025, experts predict online gaming audiences will surpass 1.3 billion.
Criminals Are Shifting Their Tactics
Recent financial transparency reforms, including rigorous Know Your Customer (KYC) rules and ownership requirements, have put pressure on criminal organizations to shift away from common channels for money laundering, such as real estate, online gambling, and shell corporations, and seek avenues with little to no regulation. Enter: Online Gaming. The video game industry, particularly online multiplayer games, has seen a surge of nefarious activity in recent years. This is due to its unregulated status by local and international organizations, lax to non-existent KYC regulations, ease of transfer of in-game currency, and crowded platforms that are next to impossible to monitor efficiently and with minimal end-user friction. This combination allows criminal transactions to easily slip through a sea of legitimate ones.
The process for laundering money through an online game is straight forward. First, the criminal will download a free online game on their PC, phone, or tablet, and create a character or avatar. Then the criminal will transfer the proceeds of an illegal activity such as black-market sales into the game or use stolen credit cards to convert money into the game’s currency. Once the account is funded, the criminal will buy rare weapons or power-up their characters through microtransactions, then sell their characters or stash of in-game virtual currency at a discounted price on grey secondary market websites such as eBay, PlayerAuctions, G2G, or iGVault. Because most online games only allow the player to acquire items through microtransactions, meaning that most currencies, skins, or weapons can be bought with fees that are below $200, criminals can easily cover their tracks without drawing any attention.
How to Protect Your Online Gaming Platform
The Financial Action Task Force (FATF), an intergovernmental organization founded to develop policies to combat money laundering and financing terrorism, weighed in on virtual asset activities and service providers. This pertains to how these online platforms can be exploited for money laundering and terrorist financing purposes. Their recommendations concern the need for regulating and supervising virtual asset service providers (VASPs). A game company that sells virtual currencies may be considered a VASP.
Faced with these challenges, online gaming ID verification is increasingly important for gaming operators who need to be sure that new players are who they claim to be before they are allowed create and fund an account. It also means making sure existing players are genuine and, equally important, of proper legal age where applicable.
Ever-mindful of the end-user experience, it is therefore important that online gaming ID verification makes smart use of data to remove friction from the customer experience.
Use ID Proofing to Verify Online Gamers
There are steps to take to verify and strengthen ID verification of new and existing users, such as multi-mode verification and identity proofing. Common steps to take when verifying the identity of someone online include:
- Requiring users to provide basic identifying information such as legal name, date of birth, place of residency, and billing address.
- Requesting users upload scanned images or photos of legal documents such as driver’s license or passport.
- Verifying the authenticity of the upload documents by running them against security databases.
- Using biometric analytics to provide an added layer of security and certainty by requiring users to take a selfie to check against photo ID.
Implementing ID proofing and implementing verification solutions can help protect you and your online gaming platform.
Use Identity Verification Solutions by Integrity
Integrity by Aristotle has built a powerful suite of identity verification solutions that can be configured to carry out a wide range of functions to help you to prevent fraud and avoid costly regulatory fines. Our custom-adapted solutions make online gaming ID verification processes as simple as possible for your platform. These solutions can be implemented quickly to ensure your platform operates seamlessly, with minimal customer friction. Contact Integrity today to learn how we can help you provide the most secure online gaming experience for your valued clients today.