WebMoney and Its Customers

[R. A. Hettinga]

--- begin forwarded text


 Date: Tue, 3 Jan 2006 12:44:43 -0500
 To: Philodox Clips List <clips at philodox.com>
 From: "R. A. Hettinga" <rah at shipwright.com>
 Subject: WebMoney and Its Customers

 <http://www.businessweek.com/magazine/content/06_02/b3966104.htm>

 Business Week


 JANUARY 9, 2006   *  Editions: N. America | Europe | Asia | Edition Preference



 INVESTIGATIVE REPORT/Online Extra


 Back to Main Story

 WebMoney and Its Customers

 The ability to make anonymous money transfers is just one of the services
 attracting law-enforcement agencies' attention

 In the busy world of digital currencies, e-gold Ltd. has a controversial
 rival in Moscow called WebMoney. The Russian Internet currency company
 claims more than a million users in 37 countries (but mostly in Russia and
 Ukraine). It has doubled its tally of customers each year since 1998,
 according to founder Andrei Trubitsin.



 Like e-gold, WebMoney enables users to conduct transactions without a bank
 acting as an intermediary. Customers of the Russian outfit exchange
 ordinary money for units of WebMoney, which they can swiftly transfer to
 anyone else with an account on the system. WebMoney isn't anchored to gold
 in the way e-gold says it is. But WebMoney units do maintain a fixed value
 -- a feature that appeals particularly to customers bruised by Eastern
 Europe's sometimes volatile currencies. WebMoney also allows users to make
 transactions worth up to 150 euros without using their real names.

 GANGS BUSTED.  That anonymity explains in part why U.S. law-enforcement
 officials have identified WebMoney, along with e-gold, as a popular payment
 vehicle among cybercrooks. And, investigators say, criminals using false
 names and identities gravitate to WebMoney to launder far more than 150
 euros at a time.

 Officials with the U.S. Postal Inspection Service say they worked with
 Eastern European authorities in 2004 to shut down two cybergangs, known
 online as dumpsmarket and carderportal. According to the postal inspectors,
 the gangs had laundered proceeds from the sale of stolen credit cards
 through two digital currencies, including WebMoney.

 Trubitsin acknowledges that some criminals do use WebMoney. But he says
 this isn't his fault, and he denies that the company has designed WebMoney
 to disguise online crime. He stresses his work with law enforcement
 agencies to catch crooks. In 2005, the company received some 300 requests
 for information about its users from Russian officials and foreign
 law-enforcement agencies, he says. It's natural that as the business grows,
 it will receive a larger number of such queries, he adds.

 EASY TO CLOAK.  To prevent money laundering, WebMoney uses a verification
 system that identifies customers and tracks their transactions, Trubitsin
 says. It issues "digital passports" based on notarized identity documents,
 which every person opening a WebMoney account must submit, he adds. Anyone
 who breaks the rules, he says, can have his account closed.

 U.S. officials worry that WebMoney's Moscow location has added to its
 appeal among online criminals. Getting cooperation from Russian courts and
 obtaining documents from Russian companies is time-consuming and difficult,
 U.S. investigators say. That makes it easier for cybercriminals -- already
 adept at using fake identities -- to obscure their money trails.

 In April, the Financial Crimes Enforcement Network (FinCEN), the U.S.
 Treasury Dept.'s anti-money-laundering unit, cited WebMoney, along with
 e-gold, as a digital currency used to move funds from the sale of stolen
 identity and financial data into a Latvian bank that FinCEN labeled "a
 primary money-laundering concern," which means U.S. banks are barred from
 doing business with it.

 WebMoney's Trubitsin calls the FinCEN report "nonsense" and says WebMoney
 doesn't have any dealings with the bank. He adds: "On our Web site are
 posted our terms and agreements, special for financial investigators in
 America who can't be bothered to read them."


 By Brian Grow in Atlanta and Bryon MacWilliams in Moscow



 --
 -----------------
 R. A. Hettinga <mailto: rah at ibuc.com>
 The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
 44 Farquhar Street, Boston, MA 02131 USA
 "... however it may deserve respect for its usefulness and antiquity,
 [predicting the end of the world] has not been found agreeable to
 experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

--- end forwarded text


-- 
-----------------
R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'