How Fortnite Showcases the Need for Identity Verification Services for the Entire Gaming Industry
Fortnite is an insanely popular video game developed by Epic Games with over 200 million global users. It was released in 2017 and has taken the world by storm, surpassing both World of Warcraft and Minecraft in popularity. Last week, The Independent revealed that criminals are using Fortnite to launder money. Not only does this put players in danger of fraud, it also puts the Epic Games business at risk. If these types of activities continue within the video game, regulators may be inclined to introduce Anti-money laundering (AML) regulations to video game companies. To stay ahead of regulators, Epic Games—and other gaming companies—could add Identity Verification Services to different points within their gaming environments. This would help reduce money laundering through Fortnite and meet compliance standards.
How is Money Laundering Happening
With over $3 billion dollars of profit being generated by Fortnite, there is a lot of money being transferred through the video game. This includes laundered money, which criminals have been able to move in and out of the game with minimal effort. There are relatively low security measures within Fortnite, making it easy for criminals to perform their nefarious activities.
To launder money, many criminals are using stolen credit cards to purchase in-game currency, V-bucks, through the official Fortnite store. Once the V-bucks and items are stockpiled in an account, it is then sold to legitimate players outside of the Fortnite system through a third party.
Typically, it costs $10 for 1000 V-bucks within Fortnite. Criminals looking to launder money sell their accounts at a discounted rate. Sixgill, a cybersecurity firm that investigated Fortnite, found that around $250,000 US worth of Fortnite items were sold on eBay in the last 60 days alone. This is happening globally with operations taking place in Chinese, Russian, Spanish, Arabic, and English. Furthermore, Sixgill also found that Fortnite accounts are also being sold on the dark web. Here, sellers are accepting cryptocurrencies like bitcoin or bitcoin cash in exchange for V-bucks or accounts stockpiled with rare in-game items.
In both instances, these processes effectively laundered money.
The Problem for Epic Games
Fortnite is being targeted by criminals for a number of reasons. The game is extremely popular, and its user base is diverse in age, gender, socio-economic status and country of origin. With so many users, Epic Games is finding it difficult to catch criminal activity within Fortnite. This is causing criminal activity to actively grow within Fortnite, with no sign of slowing down.
Epic Games has put itself in a precarious situation. By not stopping money laundering within its game Fortnite, it is effectively breaking global AML regulations. Under current AML laws, regulated companies must have dedicated Anti-money laundering solutions that perform due diligence to detect and report suspicious activity with funds within their systems of operation. Failing to meet these laws is setting up Epic Games for future global oversight. Regulators may be inclined to make video game companies meet AML compliance and help prevent fraud and money laundering in the global economy.
There is no choice for Epic Games. They must find anti-money laundering solutions that addresses their current money laundering problems and tackle the problems head on. In order for their company to stay viable and in business, they need to fix the AML issues within Fortnite, or risk being shut down by future AML regulations that hit online gaming companies.
KYC is an Important part of AML
A major part of AML laws is Know Your Customer (KYC). KYC requires companies to know the people they are doing business with. It is an important part of an overall AML security strategy. These guidelines and procedures will help companies prevent themselves from doing business with criminals and other nefarious characters.
Many video game companies do not introduce KYC procedures into their systems because they see them as a nuisance. They believe the customers will find KYC procedures tedious and create friction within their games. This could cause customers to abandon the game and play elsewhere. While this may be true to some degree, regulators believe that this tension is necessary to protect individuals and the world at large from fraud and activities funded through money laundering—think terrorist financing.
Companies must introduce KYC and AML solutions that create the least amount of friction possible for users while also creating a barrier for money laundering.
Adding Identity Verification Services to Online Games
Identity Verification Services, like those provided by IDMERIT, can be introduced to gaming systems to help companies know their customers better. With ID verification taking place, video game companies will ensure that they interact with legitimate users. It will help them know that the players within their game are there to actually play the game, not to perform other questionable activities.
For Fortnite specifically, there are two places within the game that identity verification procedures could be added to the system. One is during the account sign up process. This will help Epic Games only allow legitimate people play the game since criminals using fake or synthetic identity information would be prevented from creating a game account. ID verification is already being added to other video games, such as League of Legends in China by game owner Tencent. While the practice is relatively new now, it could become commonplace in the near future as video game companies become aware of its importance as a security procedure.
The other is during credit card processing in the Fortnite store. Identity Verification Services could be added as a precautionary step during large volume transactions. If a purchase met a certain threshold, ID verification software would be used to detect if the credit card used for purchasing the V-bucks belongs to the person making the transaction. Adding this security procedure would make it more difficult for criminals to purchase large volumes of V-bucks with stolen credit card information. This could assist Epic Games in stopping illegal V-bucks sales through eBay or the dark web.
Identity verification services offer a way for video game companies to start securing their gaming systems. It will give them the opportunity to protect themselves from doing business with criminals and allowing money laundering to occur within their games. Plus, it can give them peace of mind that they are actively working to meet global AML regulations.
For Epic Games, we recommend adding identity verification procedures to Fortnite to combat the money laundering occurring within the game. Since criminal activity within video games is expected to continue rising, they must work to prevent that crime from happening. Identity verification processes are a good first step for companies to meet regulatory compliance. It will help Epic Games build trust between them, their customers and future regulators.