The United Nations Office on Drugs and Crime (UNODC) has released a report urging Southeast Asian nations to criminalize the operations of money service businesses or virtual asset service providers (VASPs) without proper licensing. The agency expressed concerns that some unlicensed VASPs, including those associated with criminal networks, are facilitating illicit activities such as fraud and high-risk gambling operations. The report highlighted transactions with criminal organizations worth hundreds of millions of dollars and mentioned involvement with drug trafficking, cybercrime, child exploitation, and entities under U.S. sanctions, including North Korea’s Lazarus Group.
In addition to criminalizing unlicensed VASPs, the UNODC’s recommendations include enhanced surveillance of organized crime involvement in various sectors like casinos and cyber fraud operations. The agency also calls for improved training for law enforcement in handling online gambling schemes and money laundering facilitated by cryptocurrencies. While not all scams in the region are linked to cryptocurrencies, the UNODC noted their frequent use by scammers due to the ease of cross-border transactions, misinformation among users, and low levels of understanding. The breakdown of international law enforcement cooperation and asset recovery processes also exacerbates the issue.
Online fraud has significantly increased in Southeast Asia, often operating from inconspicuous locations or within casino complexes. A previous UN report estimated that around 220,000 individuals are employed in scam operations in Cambodia and Myanmar, with many being deceived into such roles under false job promises. Common scam methods in the region include “pig butchering,” a type of romance scam where fraudsters build trust with victims before convincing them to invest in fraudulent platforms. Other scam techniques identified include impersonation, job scams, asset recovery schemes, and phishing attacks, with scammers utilizing technologies like artificial intelligence and deepfakes to enhance their schemes.
Phishing attacks remain a major concern for crypto users in Southeast Asia, resulting in substantial financial losses. In September alone, more than 10,000 individuals reportedly lost over $46 million to various crypto phishing scams. The UNODC emphasized the critical need for governments to recognize the severity and scale of the global threat posed by criminal activities facilitated by high-risk VASPs in the region. The agency stressed the importance of increased awareness, information sharing among law enforcement, and prioritizing solutions to address the evolving criminal ecosystem.
The report emphasizes the importance of addressing the rapidly evolving criminal landscape in Southeast Asia, highlighting the role of high-risk virtual asset service providers as a new avenue for criminal industries to expand their activities without accountability. The UNODC’s recommendations also extend to training law enforcement on advanced technologies like cryptocurrencies to combat online gambling schemes and money laundering effectively. Enhanced surveillance of organized crime involvement in sectors linked to scam activities, along with improved cooperation among law enforcement agencies, is crucial in combating the rise of online fraud and criminal activities across the region. The agency’s call for increased awareness and information sharing among law enforcement aims to combat the global threat posed by criminal organizations leveraging advanced technologies for illicit activities.
