The Washington Post has an article about the Intelligence Advanced Research Projects Activity’s
take on the numerous virtual worlds (e.g. Second Life) that have
cropped up in recent years. IARPA’s thesis is that because the
Government can’t currently monitor all the communication and
interaction, terrorists will plot and scheme in such environments.

U.S. intelligence officials are cautioning that popular Internet
services that enable computer users to adopt cartoon-like personas in
three-dimensional online spaces also are creating security
vulnerabilities by opening novel ways for terrorists and criminals to
move money, organize and conduct corporate espionage.

Over the last few years, "virtual worlds" such as Second Life
and other role-playing games have become home to millions of
computer-generated personas known as avatars. By directing their
avatars, people can take on alternate personalities, socialize, explore
and earn and spend money across uncharted online landscapes.

Nascent
economies have sprung to life in these 3-D worlds, complete with
currency, banks and shopping malls. Corporations and government
agencies have opened animated virtual offices, and a growing number of
organizations hold meetings where avatars gather and converse in newly
minted conference centers.

Intelligence officials who have
examined these systems say they’re convinced that the qualities that
many computer users find so attractive about virtual worlds —
including anonymity, global access and the expanded ability to make
financial transfers outside normal channels — have turned them into
seedbeds for transnational threats.

"The virtual world is the
next great frontier and in some respects is still very much a Wild West
environment," a recent paper by the government’s new Intelligence
Advanced Research Projects Activity said.

"Unfortunately, what
started out as a benign environment where people would congregate to
share information or explore fantasy worlds is now offering the
opportunity for religious/political extremists to recruit, rehearse,
transfer money, and ultimately engage in information warfare or worse
with impunity."

The government’s growing concern seems likely to
make virtual worlds the next battlefield in the struggle over the
proper limits on the government’s quest to improve security through
data collection and analysis and the surveillance of commercial
computer systems.

Virtual worlds could also become an actual
battlefield. The intelligence community has begun contemplating how to
use Second Life and other such communities as platforms for cyber
weapons that could be used against terrorists or enemies, intelligence
officials said. One analyst suggested beginning tests with so-called
teams of cyber warfare experts.

The IARPA paper concurred: "What
additional things are possible in the virtual world that cannot be done
in the real world? The [intelligence community] needs to ‘red team’
some possible scenarios of use."

The CIA has created a few virtual islands for internal use, such as training and unclassified meetings, government officials said.

Some
veterans of privacy debates said they believe that law enforcement and
national security authorities are preparing to make a move, through
coercion or new laws, to gain access to the giant computer servers
where virtual worlds reside.

Jim Dempsey, policy director at the
Center for Democracy and Technology, a nonpartisan group that monitors
privacy issues, said he heard the same worries from the government when
cell phones became popular in the 1980s and again when mainstream
American logged on to the Internet in the 1990s.

Dempsey said the
national security fears are overblown, in part because the country
already has legal and technical mechanisms in place to give the
government access to digital records it needs.

"They want to
control this technology and make it even easier to tap than it already
is," Dempsey said. "When the government is finished, every new
technology becomes a more powerful surveillance tool than the
technology before it."

Questions about the impact of innovations
in communications technology are nothing new. Criminals, terrorists and
others have used Web sites for more than a decade to recruit, operate
scams and trade pornography. Law enforcement and intelligence
authorities responded to new technologies by repeatedly seeking out new
surveillance authorities.

Intelligence officials said, however,
that the spread of virtual worlds has created additional challenges
because commercial services do not keep records of communication among
avatars. Because of the nature of the systems, the companies also have
almost no way of monitoring the creation and use of virtual buildings
and training centers, some of them protected by nearly unbreakable
passwords.

"Virtual environments provide many opportunities to
exchange messages in the clear without drawing unnecessary attention,"
the IARPA paper said. "Additionally, there are many private channels
that can be employed to exchange secret messages."

And there are
the numbers. Some marketers and technology observers are predicting
explosive growth in the use of virtual worlds in coming years. As more
people create avatars, it will become harder to identify bad guys,
intelligence officials said. As in the real world, one of the central
difficulties is establishing the identity of individuals.

"The
challenge that we face is to be able to distinguish the fanatics from
the average person looking for some simple enjoyment," said the IARPA
paper.

One intelligence official, who spoke on condition of
anonymity, said he had no evidence of activity by terrorist cells or
widespread organized crime in virtual worlds. There have been numerous
instances of fraud, harassment and other virtual crimes. Some computer
users have used their avatars to destroy virtual buildings.

Last
month, Second Life operators shut down a dozen online banks holding
virtual currency worth an undetermined amount of actual dollars, after
computer users raised questions about whether the banks were paying
promised interest.

National security officials have begun working
informally to take stock of virtual worlds. That research likely will
take on more urgency this year, as companies in other countries prepare
to unveil their own virtual worlds.

One such world, called HiPiHi, is being created in China.
HiPiHi founders said they want to create ways for avatars to be able to
travel freely between its virtual world, Second Life and other systems
— a development that intelligence officials say make it doubly hard to
track down the identity of avatars.

In promotional material, HiPiHi officials said that they believe that virtual worlds "are the next phase of the Internet."

"The
residents are the Gods of this virtual world; it is a world of
limitless possibilities for creativity and self-expression, within a
complex social structure and a full functioning economy," the
promotional material says.

"Virtual worlds are ready-made
havens," said a senior intelligence official who declined to be
identified because of the nature of his work. "There’s no way to
monitor it."

The popularity of virtual worlds has grown despite
the technology being in an early stage of development. The systems
don’t work well on older computers or those with relatively slow
connections to the Internet. Though Second Life has more than 12
million registered users, only about 10 percent of those accounts are
active. About 50,000 people around the world are on the system at a
given moment, according to Linden Lab, which operates Second Life.

Officials
from Linden Lab have initiated meetings with people in the intelligence
community about virtual worlds. They try to stress that systems to
monitor avatar activity and identify risky behavior are built into the
technology, according to Ken Dreifach, Linden’s deputy general counsel.

Dreifach
said that all financial transactions are reviewed electronically, and
some are reviewed by people. For investigators, there also are also
plenty of trails that avatars and users leave behind.

"There are a real range and depth of electronic footprints," Dreifach said. "We don’t disclose those fraud tools."

Jeff Jonas, chief scientist of IBM
Entity Analytic Solutions, who has been examining developments in
virtual worlds, which have attracted some investment from the company,
said there’s no way to predict how this technology will develop and
what kind of capabilities it will provide — good or bad. But he
believes that virtual worlds are about to become far more popular.

"As
the virtual worlds create more and more immersive experiences and as
global accessibility to computers increases, I can envision a scenario
in which hundreds of millions of people become engaged almost
overnight," Jonas said.

Jonas said it’s almost a certainty that
clandestine activity associated with real criminals and terrorists will
flourish in these environments because of the ease, reach and obscurity
they offer.

"With these actors there will be organized criminal
planning and behavior," he said. "The likelihood that somebody is
recruiting, strategizing or planning is almost a certainty."

Via Washington Post