In my country, they don't care much about modding consoles, but piracy is prohibited. Raids are being conducted from time to time, but small time retailers of pirated CDs/DVDs can just get away with it, authorities just confiscate their stuffs and padlock their stalls. However, manufacturers/capitalists (those having equipments/replicating machines for backing up CD/DVDs) would have to face Anti-piracy charges in court. There is no law prohibiting any one to mode whatever gadgets he has, however, to make any raid legal, a representative from M$ or from any other company must file a formal complaint and be actually present during the raid to become legitimate. In my memory, no one has been convicted, or just charged for modding/tampering whatever gadgets he own.