Money laundering by crime networks

UN report highlights Southeast Asian casinos as catalysts for cyber fraud surge

Reading time 1:42 min

The Southeast Asian casino industry has become a focal point for criminal activities, including cyber fraud and large-scale money laundering, according to a new report from the United Nations.

The criminal ecosystem in the region, driven by the expanding casino industry, facilitates money laundering by organized crime networks. The illicit proceeds often stem from online scams, such as pig-butchering schemes, where scammers establish relationships with victims and persuade them into fraudulent investments.

The report highlights that these scams often originate from casinos situated in lawless areas of countries like Laos and Myanmar. Scamming compounds in these regions, believed to have trafficked hundreds of thousands of people, force individuals into carrying out telecommunications fraud.

The acceleration of globalized crime networks centred in the Mekong aided by technology has dramatically expanded criminal revenue streams,” said Jeremy Douglas, regional representative for Southeast Asia and the Pacific at the United Nations Office on Drugs and Crime, in the report’s forward.

This has necessitated a revolution in the regional underground banking architecture, resulting in the development of systems and infrastructure capable of moving and laundering massive volumes of state-backed fiat and cryptocurrencies.”

Utilizing casinos for the laundering of organized crime proceeds in Southeast Asia is not a recent phenomenon. As highlighted in the report, several casinos based in the Philippines were involved in the laundering of approximately $81 million, suspected to have been stolen by North Korea's Lazarus hacking group from Bangladesh Bank.

In recent years, the industry has undergone significant expansion, experiencing "exponential growth" subsequent to a crackdown on Macau's gambling sector initiated in 2019, according to the UNODC. As of early 2022, the report indicates the presence of over 340 "land-based casinos." The shift to cyber fraud operations became prominent when travel restrictions due to the pandemic prompted many casinos to adapt their operations.

The report emphasizes the involvement of online casinos in money laundering, citing technological tools that make it easy to set up online gambling operations. Cryptocurrencies, mirror websites, and white-label service providers contribute to the rise of online gambling platforms as a popular means for cryptocurrency-based money laundering. Tether (USDT) is highlighted as the cryptocurrency of choice for cyber fraud due to its stability, ease of use, anonymity, and low fees, the report said.

The report also discusses a crackdown by China on cross-border cybercriminal operations in Myanmar and a successful rebel offensive in the Kokang region, leading to the arrest and repatriation of thousands involved in the industry. Despite such measures, organized criminal actors in cyber fraud have demonstrated adaptability in shifting their operations under pressure.

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