Fears Criminals Could Exploit E-gold
Sun Herald
Sunday November 19, 2006
FEDERAL authorities are monitoring the growing use of internet currencies because of concerns that they could be used by criminals to launder money or finance terrorist activity.
Money transfer watchdog the Australian Transaction Reports and Analysis Centre (AUSTRAC), confirmed it was warned to be vigilant about e-gold currencies by the international Financial Action Task Force on Money Laundering (FATF).E-gold currencies are among the spin-offs of the information age. They allow for the anonymous transfer of large sums of money between countries. Australians can place potentially unlimited amounts of money in offshore accounts then make payments to others with a few keystrokes.Laws proposed by the Federal Government could make funnelling funds to accounts more difficult.Digital gold currencies are generally operated by private companies, such as the West Indies firm e-gold, holding stores of gold bullion in offshore locations.To set up an account, a consumer visits a website where, after supplying a name which typically is not checked, he or she is issued with an account number and password.Deposits can then be made, without ID, through Australian banks. The cash paid in is then converted to an equivalent amount of gold and credited to the offshore account.Deposits can also be made via Western Union money transfer and credit card.The Sun-Herald was able to set up a bogus account with e-gold in the name of Jean Sablon after depositing money with a city branch of a nominated Australian bank.While digital gold currency accounts are attractive to people legitimately interested in trading in gold, they could also appeal to internet crooks. All that is needed to make a payment is an account number. Once a payment in received in electronic gold, it can be converted back to cash. A spokeswoman for AUSTRAC, charged with uncovering money laundering, said the potential of e-gold had come to its attention after talks with the FATF.In a recent report the FATF warned that e-gold and other operators offered "the potential for anonymous cross-border funds transfers" and urged vigilance by governments."While there is a legitimate market demand for these payment methods, money laundering and terrorist financing vulnerabilities exist," it said.A spokesman for Federal Justice Minister Chris Ellison said anti-money-laundering laws now before Parliament would give banks greater responsibility to identify and report suspicious e-currency transactions."Under the new legislation, AUSTRAC will have an expanded role supervising, monitoring compliance and enforcing the anti-money-laundering regime," he said.Chairman and founder of e-gold Douglas Jackson said his service was not open to exploitation. "E-gold would be the worst possible choice - a career-ending, game-over blunder - for any criminal seeking to obfuscate a money trail or otherwise disguise the proceeds of crime," he said."E-gold is more traceable than any other payment system."
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