A new report from an agency of the United Nations (U.N.) has voiced concerns about the growing risks related to transnational criminal groups in Southeast Asia, which make use of “underregulated casinos, junkets, and illegal online gambling platforms that have adopted cryptocurrency”.
The policy report, titled “Transnational Organized Crime and the Convergence of Cyber-Enabled Fraud, Underground Banking, and Technological Innovation: A Shifting Threat Landscape”, was issued this month by the U.N. Office on Drugs and Crime (UNODC).
The report pointed out that “the transnational organised crime threat landscape in Southeast Asia is evolving faster than in any previous point in history”.
“This change has been marked by growth in the production and trafficking of synthetic drugs and cyber-enabled fraud, driven by highly sophisticated syndicates and complex networks of money launderers, human traffickers, and a growing number of other service providers and facilitators,” it added.
Despite mounting law enforcement efforts, the U.N. agency estimated that cyber-enabled fraud “has continued to intensify, resulting in estimated financial losses of between US$18 billion and US$37 billion from scams targeting victims in East and Southeast Asia in 2023”.
The UNODC suggested that “the sheer scale of proceeds being generated within the region’s booming illicit economy has required the professionalisation and innovation of money laundering activities,” adding that transnational criminal groups in Southeast Asia “have emerged as global market leaders”.
It stated: “Building on existing underground banking infrastructure including under-regulated casinos, junkets, and illegal online gambling platforms that have adopted cryptocurrency, the proliferation of high-risk virtual asset service providers (VASPs) across Southeast Asia have now emerged as a new vehicle through which this has taken place, servicing criminal industries without accountability.”
Masood Karimipour, UNODC regional representative for Southeast Asia and the Pacific, said in prepared remarks that organised crime groups were “converging and exploiting vulnerabilities, and the evolving situation is rapidly outpacing governments’ capacity to contain it”.
He said criminal groups were “producing larger scale and harder to detect fraud, money laundering, underground banking and online scams”.
Mr Karimipour added: “This has led to the creation of a criminal service economy, and the region has now emerged as a key testing ground for transnational criminal networks looking to expand their influence and diversify into new business lines.”
The report outlined recent cases that it claimed to demonstrate “how under-regulated online gambling platforms and increasingly high-risk and often unauthorized VASPs … are being used by major organised crime groups to move, launder and integrate billions in criminal proceeds into the financial system without accountability.” the UNODC said in a press release.
Cases examined “also highlight how illegal online casino operators have diversified business lines to include cyber-enabled fraud and crypto-based money laundering services.
“Extensive evidence shows organised crime influence within casino compounds, special economic zones and border areas [in Southeast Asia] to conceal illicit activities,” it added.
