Technological Shift Among Southeast Asian Organized Crime Groups 'Revolutionized' Crypto Laundering: UN

The adoption of technology among transnational organized crime groups that operate online casinos and crypto-related activities in Southeast Asia has "revolutionized the crime environment in the region," a new United Nations Office on Drugs and Crime (UNODC) report revealed.

In particular, organized crime groups around the Mekong area – a transboundary river in Southeast Asia and East Asia – have adapted blockchain technology, mining and processing data, and even artificial intelligence, "resulting in the development of systems and infrastructure capable of moving and laundering massive amounts of of state-backed fiat and cryptocurrencies," said Jeremy Douglas, the UNODC's regional representative for Southeast Asia and the Pacific.

Online casinos have proven to be an efficient means of laundering obscured volumes of crypto and state-backed fiat, thus integrating "billions in criminal proceeds" into the region's formal financial system.

While online casinos and its related businesses have driven underground banking activities and money laundering in the past years, the surge in under-monitored crypto exchanges helped create new channels and opportunities for organized criminals.

The report examined cases that highlighted the diversification tactics used by illegal online casino operators, as heavily influenced by organized criminals and some armed groups in Myanmar. Cybercrimes have also exploded due to the technological shift in organized crime circles.

The formal online gambling market is projected to expand to more than $205 billion in the next six years, and the Asia Pacific region is expected to account for the largest share in the market's growth between 2022 to 2026, at a 37% projected growth rate.

Without elaborating, the report also said it observed through blockchain data and case information analysis "several instances" of sharing money laundering and underground banking networks between Mekong area organized criminals and North Korean hackers.

For organized crime groups, illegal online casinos and crypto "have proven the point of least resistance," Douglas said. The groups specifically pick areas across Southeast Asia where there is less enforcement of regulations against crypto and online gambling or where there is opportunity for underground banking and money laundering to proliferate without being held to account.

Among the Southeast Asian nations that have stepped up syndicate operations and caused some displacement for organized crime groups are Thailand, Cambodia and the Philippines. Thailand and Cambodia are among the six countries that the Mekong River flows through.

Despite efforts by some Southeast Asian governments to rein in organized crime groups, the UNODC noted that authorities have a lot of work to do in closing the fast-widening gap between the explosion of organized crime activities and regulating online gambling and cryptocurrency.

"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," said Benedikt Hofmann, UNODC deputy regional representative.