UN report claims Southeast Asia black-market operators disguising criminal activity

A UN report has uncovered a slew of criminal activity in Southeast Asia which has been concealed by black-market online casinos.

The report, compiled by the UN Office on Drugs and Crime (UNODC), highlighted practices of money laundering and cyber fraud conducted through illegal casino operators. 

The investigation showed instances of money laundering taking place via cash deposits and withdrawals, collusion between gamblers, junket financing and misuse of VIP accounts. 

In the land-based sector, black-market casinos are also conducting ‘safekeeping’ transactions whereby players, including “those with clear links to organised crime”, can deposit casino chips for safekeeping with respective casino treasury divisions and cashout later.

The report suggested authorities have had difficulty in tracking such transactions due to the number of payment options available at online casinos, meaning it’s hard to prove a source of funds. 

The issue is then exacerbated by what the report describes as a “non-face-to-face element, minimal, if any, compliance staff, and huge and complex volumes of transactions and financial flows, which are often international in nature”.

The number of transactions in cryptocurrency, which are even harder to trace, have also risen in parts of Southeast Asia, partly due to the Chinese government banning the practice in 2021. 

The report additionally alleged that criminal organisations have capitalised on high levels of youth unemployment in the region. 

This has led to criminals recruiting young people en masse to carry out cyber fraud operations “using the promise of lucrative employment and professionalised recruitment schemes, often using social media platforms such as Telegram, WeChat, TikTok and Facebook”. 

Masood Karimipour, UNODC regional representative for Southeast Asia and the Pacific, said: “Organised crime groups are converging and exploiting vulnerabilities, and the evolving situation is rapidly outpacing governments’ capacity to contain it.

“Leveraging technological advances, criminal groups are producing larger scale and harder to detect fraud, money laundering, underground banking and online scams. 

“This has led to the creation of a criminal service economy, and the region has now emerged as a key testing ground for transnational criminal networks looking to expand their influence and diversify into new business lines.”

The UN estimates these practices are allowing criminal rings to “move, launder and integrate billions in criminal proceeds into the financial system without accountability”.

The UNODC report recommended countries in the region undertake an in-depth analysis of online gambling platforms and their connection to money laundering.

Other advice points included collaborating with each other to gain a greater understanding of how money moves illegally between countries and greater monitoring of criminal organisations and forums where criminal activity is discussed.

Further recommendations suggested developing national action plans to deal with organised crime and implementing specific legislation for online gambling platforms and money laundering.

Karimipour added: “It is more critical than ever for governments to recognise the severity, scale and reach of this truly global threat, and to prioritise solutions that address the rapidly evolving criminal ecosystem in the region.”

Earlier this week, the Betting and Gaming Council (BGC) released its International Best Practice Guide for operators and policymakers worldwide.