It is a land of six million citizens with no police force, no courts and no taxes. The fast-growing economy is lightly controlled, and banks and the stock exchange lack even basic regulation.

 

Little wonder then that legal experts claim the lax regime could provide a haven for money launderers, fraudsters and even terrorists to hide and move funds.

 

However, this is not the real world. It is Second Life, the "virtual online community". Unfortunately, the criminal networks threatening to take advantage of the cyberspace world are all too real.

 

Now a report drawn up for Britain's Fraud Advisory Panel (FAP) is calling on the Government to extend real-world financial regulation into Second Life and similar games. The study warns that players can transfer large sums of money across national borders without restriction and with little risk of being detected.

 

The FAP, a watchdog established by the Institute of Chartered Accountants in England and Wales, says that criminal or terrorist gangs could use the game to move funds and avoid surveillance. Other risks, it says, include credit card fraud, identity theft, money laundering and tax evasion.

 

Second Life was created in 2003 by Linden Lab, a San Francisco-based technology company. The number of users has soared from 700,000 last autumn to 6.2 million.

 

Players create on-screen characters known as "avatars" who can mingle with others anywhere in the world. Using a pretend currency called "Linden dollars", they can buy and sell virtual items from clothes to homes, for fun or to impress. Characters can even start up businesses. Crucially, Linden dollars can be freely exchanged for real American dollars. On an average day, about £750,000 changes hands.

 

The warnings follow the announcement last week that German prosecutors have launched an investigation into allegations that child pornography was sold on Second Life. Last month, Linden Lab called in the FBI to assess if its virtual casinos break US laws against online gambling.

 

Steven Phillipsohn, a fraud litigation solicitor and chairman of the FAP's cybercrime working group, said: "There's nothing virtual about online crime, it is all too real. It is time government took this seriously.

"The legitimate benefits of virtual communities will prove enormous, but people need to be aware that this cutting-edge technology has a darker side.

 

"Money laundering is the obvious risk. There will be a migration of fraudsters into these sites when they see all of the opportunities."

The report describes Second Life as "a parallel universe with almost no external rule of law, no enforced banking regulations or compliance, no policing and no governmental oversight".

 

It adds: "Commerce, relationships and criminal activity in virtual online communities are hidden. But the money is real and, in the case of fraud, tax evasion or theft, so is the loss."

 

A move to regulate Second Life would require the Government to extend the scope of

A spokesman for Linden Lab, said: "Second Life's terms of service make it clear that each resident is morally, socially and legally responsible for their opinions and behaviour in-world, and that illegal activity will not be tolerated.

 

Last year, Ailin Graef, a Chinese-born teacher living in Germany, claimed to have become the first person to make $1 million (£500,000) on Second Life. Her "avatar", Anshe Chung, amassed the fortune by developing virtual properties and selling or renting them to other "avatars".

 

:lol: I have an account, but rarely plod around on it. Only folowed it up after seeing it on Click on BBC News 24.

 

Can't say I really understand the whole thing, with the currency and stuff.

Second Life world may be haven for terrorists,

 

well only if the server is actually located next to estonia's :lol:

 

Has anyone ever heard of this computer reality game?

 

Has anyone heard of SL?? though everyone would have heard of SL by now its as well known as youtube, google and cd-wow

 

http://farm1.static.flickr.com/57/224092368_71b7e98276.jpg

 

now only if they can be left there forever and ever :lol:

Not sure why anyone would want a second life on the net anyway? Those people need to get out more and make the REAL world a better place ^_^

Not sure why anyone would want a second life on the net anyway? Those people need to get out more and make the REAL world a better place ^_^

 

and what are you doing here then? isnt that abit mr kettle meet mr pot