The United Nations Office on Drugs and Crime (UNODC) report titled “Casinos, Money Laundering, Illicit Banking and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat,” released in January 2024, reveals a complex and a disturbing situation regarding the misuse of cryptocurrencies and technological innovations in illicit economies, especially in East and Southeast Asia.
Key findings
Transformation of organized crime: There has been a significant evolution in transnational organized crime in Southeast Asia, particularly with the growth of cross-border trafficking of synthetic drugs and other goods. Organized crime groups have embraced technology, revolutionizing the region’s criminal landscape.
The Rise of Online Casinos and Cyber Scams: The COVID-19 pandemic is fueling the mushrooming of online casinos and cyber scams in Southeast Asia, especially in the Mekong region. The organized crime groups running many of these operations have used data mining, blockchain technology and increasingly generative AI, greatly complicating law enforcement efforts.
Underground Banking and Money Laundering: The report highlights the integral role of casinos and tourist establishments in the underground banking and money laundering infrastructure. This includes various methods such as cash payouts, collusion between gamblers, visit funding and abuse of casino VIP cash accounts.
Infiltration of Cryptocurrency into Illegal Activities: Organized crime groups are increasingly integrating cryptocurrencies into their illegal betting operations. This includes the use of sophisticated high-speed money laundering “cartel” teams specializing in underground exchanges of USDT – fiat currencies.
Challenges in monitoring and Regulation: The rise of cryptocurrency-integrated operations, point-of-sale syndicates, and the complex nature of online gambling platforms pose significant challenges to authorities. The anonymous nature of transactions and the lack of adequate compliance personnel in the online gambling sectors make it difficult to trace and verify the source of funds.
Generative AI and Deepfake Fraud: There is growing concern about the use of advanced technologies such as generative AI and deepfake for cyber fraud schemes. These technologies allow fraudsters to create highly realistic images and voices, leading to sophisticated investment fraud and other malicious activities.
Policy and enforcement recommendations: The report suggests the development of national action plans and a regional strategy to address these challenges. It highlights the need for revised legislation related to money laundering, asset forfeiture and casino management. It also recommends the creation of a regional interagency forum for information and intelligence sharing, enhanced digital forensics capabilities and mandatory submission of Suspicious Transaction Reports (STRs) by casinos.
Conclusion
The report highlights the growing sophistication of organized crime in the digital age, highlighting the need for stronger regulatory frameworks and international cooperation to tackle these evolving threats.
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