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Virtual worlds that have become a second home to millions of computer users could come under governmental scrutiny as fears grow that criminals are using them to launder money.

A report due out this month from consultancy firm Deloitte will say the nascent economies that have developed inside internet-based games such as Second Life and Entropia Universe could be exploited by criminal gangs.

The report warns the games could tempt organised criminals, because players can trade virtual property and convert profits into real currency.

Virtual realities have grown in sophistication since role-playing computer games migrated to the web and allowed players to interact with potentially unlimited numbers of people.

While games like World of Warcraft concentrate on fantasy challenges, Second Life and Entropia have created worlds where virtual property magnates, clothes designers and prostitutes make hundreds of thousands of dollars a year.

In Entropia the virtual currency, called the PED, is pegged to the US dollar. Players can convert real money into PEDs and back again using an online payment system.

One American entrepreneur paid US$100,000 ($142,000) for a virtual space in Entropia that he planned to convert into a nightclub.

The real-world value of transactions is likely to continue growing. One estimate places the value of commerce in Second Life at US$265,000 a day, and it is estimated that average turnover is rising by 15 per cent a month.

The game's overall GDP could be close to US$700 million this year.

The explosive growth has already attracted the attention of US lawmakers, who are worried about the tax implications of transactions inside the virtual world, away from the oversight of the Internal Revenue Service.

A congressional committee is finalising a report on the real-world implications of virtual economies, although its chairman has insisted the aim is to head off taxation of virtual transactions.

Deloitte's report will argue that governments should look first at the potential for crime.

"Money launderers may use trade in digital artefacts or the ability to withdraw cash from an ATM as a means of money laundering."

A spokesman for Second Life's owner, Linden Labs, said the company was happy to co-operate with tax authorities and criminal investigators, but could not police such matters itself.

"The nature of having built a highly participatory economy makes it very difficult, and Linden Labs has always tried to take a hands-off approach to regulation."

However, the economic influence of virtual worlds is still tiny compared with global GDP of US$47 trillion and their long-term sustainability is in question.

- INDEPENDENT