UNODC Reports on Casinos and Cryptocurrency Scams and Money Laundering

Understanding Organized Crime

Authors:
•  SCARS Editorial Team – Society of Citizens Against Relationship Scams Inc.
•  UNODC – United Nations Office of Drugs and Crime

Article Abstract

A newly released United Nations UNODC report highlights the significant role played by casinos, junkets, and cryptocurrencies in facilitating underground banking, money laundering, and transnational organized crime in East and Southeast Asia.

Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden, Accelerating Threat, underscores the connection between illegal online casinos, e-junkets, and cryptocurrency exchanges. The report notes the proliferation of these elements alongside rising cross-border criminal activities in the region. The study reveals that online casinos and related businesses have been exploited by major organized crime groups to move and launder substantial volumes of fiat and cryptocurrencies, integrating billions in criminal proceeds into the financial system. It emphasizes the need for enhanced knowledge, legislation, enforcement, and regulatory responses to address the growing criminal landscape.

Casinos and cryptocurrency: major drivers of money laundering, underground banking, and cyberfraud in East and Southeast Asia

A new UNDOC (United Nations Office of Drugs and Crime) report has found that casinos, junkets, and cryptocurrency scams have emerged as a critical piece of the underground banking and money laundering infrastructure in East and Southeast Asia, fuelling transnational organized crime in the region.

The UNODC study highlights the nexus between illegal online casinos, e-junkets, and cryptocurrency exchanges that have proliferated in recent years alongside surging cross-border criminality throughout the region.

“Casinos and related high-cash-volume businesses have been vehicles for underground banking and money laundering for years, but the explosion of underregulated online gambling platforms and crypto exchanges has changed the game,” said Jeremy Douglas, UNODC Regional Representative for Southeast Asia and the Pacific. “Expansion of the illicit economy has required a technology-driven revolution in underground banking to allow for faster-anonymized transactions, commingling of funds, and new business opportunities for organized crime. The development of scalable, digitized casino- and crypto-based solutions has supercharged the criminal business environment across Southeast Asia, and particularly in the Mekong.”

As outlined in the report, countless recent cases demonstrate that online casinos and related businesses have been used by major organized crime groups to move and launder massive volumes of state-backed fiat as well as engage in cryptocurrency scams, effectively creating channels for integrating billions in criminal proceeds into the financial system. At the same time, the creation and success of these underground banking mechanisms have helped expand the region’s broader illicit economy, in turn attracting new networks, innovators, and service providers to the criminal ecosystem.

UNODC examined cases that also highlight how illegal online casino operators have diversified business lines to include cryptocurrency scams and cryptocurrency laundering, with extensive evidence of organized crime influence within casino compounds, special economic zones, and border areas, including those controlled by armed groups in Myanmar to conceal illicit activities.

“Organized crime groups have converged where they see vulnerabilities, and casinos and cryptocurrency scams have proven the point of least resistance,” Douglas added. “That said, operations against syndicates in countries including Cambodia and the Philippines have caused a partial displacement, and we have seen criminals moving infrastructure into other places where they see opportunity — basically where they expect they will be able to take advantage and not be held to account, to remote and border areas of the Mekong, and recently elsewhere.”

Locations of casinos in lower Mekong countries in 2022 where they are engaged in cryptocurrency scams.
Source: UNODC elaboration based on information obtained through various channels, including its Country Offices in Southeast Asia and field researchers.

UNODC analysis estimates there were more than 340 licensed and unlicensed land-based casinos operating in Southeast Asia as of early 2022, with most having shifted online to offer live-dealer streaming and various proxy betting services, plus behind-the-scenes slave labor cryptocurrency scams call centers. According to the latest available industry data, the formal online gambling market is projected to grow to more than US $205 billion by 2030, with the Asia Pacific region representing the largest share of market growth between 2022 to 2026 at a projected 37%. The study describes several policy developments and enforcement measures implemented by governments in the region to address illegal casino-based capital outflows, corruption, and money laundering that have in part driven these trends.

The technical policy brief from the UNODC describes the mechanics, intricacies, and drivers of underground banking in the region, and has been developed through extensive examination and analysis of criminal indictments, case records, court filings, related public disclosure, and other data collected in consultation with authorities and partners over more than a year. Its development has included an extensive mapping and analysis of thousands of so-called ‘grey and black business’ online groups, including clear web and dark web forums and marketplaces, used for illicit activities. The study also provides a list of recommendations geared towards strengthening knowledge and awareness, legislation and policy, and enforcement and regulatory responses in the region, intended to assist governments in addressing the situation.

“It’s clear that the gap between organized crime and enforcement authorities is widening quickly. If the region fails to address this criminal landscape the consequences will be seen in Southeast Asia and beyond as criminals look to reinvest profits and innovate operations,” stated Benedikt Hofmann, UNODC Deputy Regional Representative. “We trust the report will prove as a useful reference for deeper engagement between countries in Southeast Asia, UNODC, and international partners,” Hofmann said. “At this point, we are just scratching the surface.”

U.N. Report Casinos and Cryptocurrency Scams and Money Laundering 2024

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