Thomson Reuters and the International Center for Missing and Exploited Children (ICMEC) have formed a task force to look at the impact of the digital economy on criminal activities such as child trafficking. They are working with the Bitcoin Foundation to explore decentralized currencies as part of the effort.

The organizations will explore how criminals may be laundering money via digital payment systems to support activities such as human trafficking and child pornography.

Around eight years ago, ICMEC discovered that the commercial child porn industry was proliferating on the Internet, and that most purchases were carried out using credit cards, explained Ernie Allen, president of ICMEC. It pulled together banks and credit card companies to address the problem.

One of the first things that the task force will do is outline the scope of the problem, Allen continued, explaining that it is exploring a digital economy far bigger than just bitcoin.

“Our goal is to bring together a group of people in a voluntary collaborative way to look for balanced, reasonable solutions that protect the strengths of a digital economy, recognizing the enormous potential for financial inclusion and engaging the 2.5 billion adults on the planet who have no access to banks or the mainstream payment system, while finding a way to give law enforcement the ability to address the abuses,” he said.

Atlantis and Silk Road

notwithstanding, Patrick Murck, general counsel for the Bitcoin Foundation, believes that decentralized payment systems are far less attractive to nefarious players wanting to cover their tracks.

“In a decentralized system, people overestimate their ability to make themselves private,” he said, dismissing suggestions that the technically astute could use the anonymous nature of bitcoin addresses to shield themselves from scrutiny. “I don't think that many in the sophisticated criminal set would appreciate a permanent paper trail of every transaction that they have ever conducted.“

Conversely, he argues that some centralized virtual currency systems could prove attractive to online criminals. He singled out Liberty Reserve, the Costa Rica-based virtual currency exchange shut down in May, as a good example.

The task force will include several groups targeting specific aspects of the problem. They will look at law enforcement, regulatory concerns, and human rights issues. There will also be a working group focusing on assessment methodologies to determine how strong the link is between digital economies and criminal activities, if any.

“We're spending a good deal of time on defining the problem itself,” said Allen. “So much of what we know is anecdotal, and we're talking about criminal enterprises operating under virtual anonymity.”

In June, Thomson Reuters produced a report on criminal activities in the digital economy. It found that only 10% of fraud examiners had worked on a case involving digital currencies. 61% of them felt that digital currencies would change the way that they conducted fraud investigations.

Other organizations participating in the Task Force include the Cato Institute, the Mercatus Center at George Mason University, the Bill and Melinda Gates Foundation, the Brookings Institution, the Tor Project, Trend Micro, USAID, and women’s human rights group Vital Voices.

Image credit: ICMEC