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Monday, June 3, 2013

Daily Report: Systems for Moving Anonymous Cash Abound Online

Experts say there are hundreds of Internet payment systems that do not require users to identify themselves, making it difficult to seize on money laundering operations, Nicole Perlroth reports in The New York Times.

For eight years, Ernie Allen, the head of the International Center for Missing and Exploited Children, has worked to prevent child pornographers from moving illicit profits through the systems of major banks and credit card companies. Mr. Allen’s organization has collaborated with them, as well as with Internet service providers, payment processors and Internet companies like Google and Microsoft, hoping to follow the money and quash child pornography for good.

But at some point the money trail went cold. For the last year, Mr. Allen has been working with global law enforcement and financial leaders to find out why.

He may be getting closer to an answer. Today, cybersecurity experts say billions of dollars made from child pornography and illicit sales of things like national secrets and drugs are being moved through anonymous Internet payment systems like Liberty Reserve, the currency exchange whose operators were indicted on Tuesday for laundering $6 billion. Preet Bharara, the United States attorney in Manhattan, described it as the largest online money-laundering case in history.

“What we have concluded is that illegal enterprises â€" commercial child pornography, human trafficking, drug trafficking, weapons trafficking and organized crime â€" has largely moved to an unregulated system that is not connected to any central bank or national authority,” Mr. Allen said. “The key to all of this has been anonymity.”

Liberty Reserve was shut down last weekend, but cybersecurity experts said it was just one among hundreds of anonymous Internet payment systems. They said online systems like the Moscow-based WebMoney, Perfect Money, based in Panama, and CashU, which serves the Middle East and North Africa, require little more than a valid e-mail address to initiate an account. The names and locations of the actual users are unknown and can be easily fabricated. And they worry that the no-questions-asked verification system has created a safe harbor for illicit activity.