If you are a longtime reader of our articles, you may recall that, back in 2007, we warned about the potential use of Second Life, the virtual reality world where users create avatars, to interact and trade virtual goods and services, as a vehicle for money laundering. The medium of exchange, called Linden Dollars, can be readily exchanged for US Dollars, and there is no virtual AML/CFT gatekeeper to police the financial activities of the avatars.
Our article generated substantial comment, much of which is still available on the Internet. Now, sixteen years after its 2003 opening, Linden Labs, the company behind Second Life, will now require that users of Second Life produce full name, date of birth, address and Social Security Number, to Linden labs subsidiary Tilia. Foreign users must supply passports or government ID cards.
FinCEN, in 2013, ruled that Linden Dollars, constituted a virtual currency, meaning that AML/CFT procedures were applicable. Why did Second Life wait six long years to comply ? And why did US regulators never impose civil fines and penalties upon the virtual reality world in 2013 ?