The Issue of Virtual Hawalas

By Ilan Weinglass

An issue that has arisen lately is that of virtual terrorism, that is, the use by terror groups of virtual communities such as Second Life.  One feature of these communities is that one can send money to other members with very little oversight.  Stephen Landman has recently written a paper which describes the situtation and makes policy recommendations for dealing with it.  To date, this is not so large an issue but it will grow quickly and we need to address it before it becomes a problem.  It is a virtual truism that terrorists are far more adept than government agencies at exploiting new technologies, and using technology to find weaknesses in regulatory regimes.  

From Stephen Landman's conclusion:

The quickest way to ensure effective regulations are in place is for the Department of the Treasury to immediately identify virtual worlds as covered institutions for purposes of the BSA’s anti-terrorist financing regulations. From there, the most important step will be verifying the identity of residents during the registration process, and ensuring that each virtual transaction can be traced back to identifiable senders and recipients.

It is somewhat of a shock that the above is not currently the law.

The whole paper may be found here: Download Virtual Hawalas