UN Report: crypto Plays A Significant Role In Fraud In Southeast Asia
Bad actors in Southeast Asia are increasingly leveraging Crypto and “producing larger scale and harder to detect fraud, money laundering, underground Banking, and online scams,” according to a new report released by the United Nations Office on Drugs and Crime (UNODC).
UNODC estimates that financial losses from scams targeting victims in East and Southeast Asia range between $18 billion and $37 billion in 2023, with a significant portion attributed to organized crime groups in the region.
The report highlights the integration of emerging technologies into criminal activities in the region—including cryptocurrencies and generative AI.
blockchain Analytics Tool Can Help Identify the Source of Crypto Assets
Slava Demchuk, UNODC Consultant and CEO of Crypto compliance firm AMLBot, believes that the issue can be addressed. He mentioned that “the nature of crypto assets is that it is possible to identify their source, e.g., where they come from, by using Blockchain analytics tools.”
Demchuk explained that “such screening steps might indicate that the crypto address is associated with some risks, such as sanctions, illegal services, dark markets, etc.”
Exploitation of Vulnerabilities by Organized Crime Groups
Masood Karimipour, UNODC Regional Representative for Southeast Asia and the Pacific, stated that "organized crime groups are exploiting vulnerabilities, and the evolving situation is outpacing governments’ capacity to contain it.”
Cybercriminals reportedly leverage underregulated online Gambling Platforms and unauthorized Virtual asset service providers to launder their proceeds, according to the UNODC report. These platforms allow organized crime groups to move funds across borders with minimal oversight, integrating illicit money into the global financial system.
Rise of Russian-language Non-KYC Instant Exchange Services for Money Laundering
The report follows a recent talk by Blockchain analytics firm Chainalysis detailing how the rise of Russian-language, non-KYC instant exchange services simplifies money laundering and sanction evasion. The UN report suggests that illegal online Casino operators have expanded their activities to include cyber-enabled fraud and crypto-based money laundering services.
The report highlights that “evidence shows organized crime influence within Casino compounds, special economic zones, and border areas to conceal illicit activities.”
Deepfakes Made with Generative AI Used for Fraud in Southeast Asia
The UNODC report notes a rise in deepfakes made with generative AI by criminal groups in Southeast Asia during the first half of 2024. Criminals are utilizing generative AI to create deepfakes, enhancing their ability to commit fraud and deceive victims.
John Wojcik, UNODC Regional Analyst, said that “these developments have expanded the scope and efficiency of cyber-enabled fraud and cybercrime.”
Organized Crime Groups Involved in Human Trafficking for Scam Operations
Organized crime groups are also involved in human trafficking, forcing workers into scam operations. Victims are often misled with false job advertisements and coerced into participating in illegal activities, including cyber fraud and money laundering.
The UNODC report highlights the need for stricter regulations and enhanced monitoring to curb the spread of fraudulent activities in Southeast Asia.
Conclusion
The findings from the UNODC report shed light on the growing complexity of financial crimes in Southeast Asia, with crypto playing a significant role in facilitating fraudulent activities. Collaborative efforts between governments, law enforcement agencies, blockchain analytics firms, and the private sector are essential to combat organized crime and protect individuals from falling victim to scams and fraud.
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Edited by Stacy Elliott.
