convergence

Lindholm and Realuyo
pay you virtual dollars for your virtual food, drink, and entertainment) and can cash out for
real-world currency. (As of October 29, 2011, for example, one online site was exchanging 286
Second Life Lindens [SLL] per U.S. dollar and 392 per euro. 30 ) There are dozens of similar
online-based financial transaction services available, many of which use the Open Metaverse
Currency—OM¢—and which trade through online currency exchanges or even virtual ATMs
within their multiuser virtual worlds.
Other Web-based sources of currency exchange such as bitcoin (“no prerequisites or
arbitrary limits” 31 ) and paysafecard (“personal details not required” 32 ) can be a concern for law
enforcement and intelligence agencies. These exchanges cater to those whose goal is to remain
anonymous in their financial transactions, typically consumers who want to avoid the compliance
checks common to traditional banking systems. These activities can be hard to trace, are
unregulated or less regulated, and are thus popular with Internet-savvy criminals. (A Twitter
post on July 27, 2011, from LulzSec, a hacker group, recommended to like-minded colleagues:
“Get yourself a slice of MyBitCoin, Liberty Reserve, WebMoney, Neteller, Moneybookers,
and start using prepaid credit and gift cards” to avoid detection.)
In the case of E-Gold, a digital currency firm, the U.S. Government alleged that the
company’s untraceable exchanges had become “a preferred means of payment for child pornography
distributors, identity thieves, online scammers, and other criminals around the world to
launder their illegal income anonymously.” 33 In 2008, its directors pleaded guilty to charges of
money laundering and running an unregistered money service business. 34 Assistant Director
James E. Finch, of the FBI’s Cyber Division, summed up the original charges by observing that,
“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.” 35
Combating Threat Finance
Recognizing financing as the lifeblood of illicit networks, the United States and its international
allies have developed multidimensional strategies and measures to combat threat financing.
International cooperation, institutional capacity-building, public-private partnerships, and
intelligence and law enforcement operations are key components of these counterthreat
financing strategies.
The Use of Financial Intelligence
At the Treasury Department, the Office of Terrorism and Financial Intelligence marshals
the department’s intelligence and enforcement functions to protect the financial system
against illicit use and combat rogue nations, terrorist facilitators, WMD proliferators, money
launderers, drug kingpins, and other national security threats. 36 After the 9/11 attacks, the
Treasury Department established the Terrorist Finance Tracking Program (TFTP) to identify,
track, and pursue terrorists such as al Qaeda and their networks. The Treasury Department
is uniquely positioned to track terrorist money flows and assist in broader U.S. Government
efforts to uncover terrorist cells and map terrorist networks at home and around the world. 37
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