Southeast Asia is facing an alarming rise in cyber-enabled fraud and organized crime, with casinos and online gambling platforms playing a central role, a recent United Nations report says.
A United Nations Office on Drugs and Crime (UNODC) report on Transnational Organized Crime reveals how underground casinos, junkets, and high-risk virtual asset service providers (VASPs) are driving the convergence of cybercrime and money laundering.
Financial losses attributed to scams targeting victims in East and Southeast Asia are staggering, with UNODC estimating losses between $18 billion and $37 billion in 2023 alone. A significant portion of these losses is linked to organized crime activities in the region.
Criminal organizations were said to be increasingly using these venues for money laundering and other illicit activities, exacerbating the challenges for law enforcement across the region.
At the same time, illegal online casinos remain key channels for transnational crime groups to integrate illicit funds into the formal economy.
These platforms have been linked to money laundering, human trafficking, and cyber fraud, generating vast profits for organized crime syndicates in the region. Sophisticated underground banking networks and cryptocurrencies have further complicated enforcement efforts.
As cyber-enabled fraud continues to evolve, the proliferation of deepfake technology and AI-driven scams is on the rise, enhancing the sophistication of criminal operations. The report warns of the growing threats posed by these developments, which are shifting criminal activity into more hidden, tech-driven spaces.
According to UNODC, this has become particularly prevalent in border regions and Special Economic Zones (SEZs) like the Golden Triangle and parts of Myanmar, Cambodia, and Lao PDR.
The Philippines and Cambodia, previously major hubs for regulated offshore gambling operations, have seen a rapid spillover into illegal operations. Despite an official ban on online gambling, Cambodia continues to struggle with unregulated platforms, while illegal online gambling thrives in regions controlled by criminal networks.
Originally driven by junket operators in Macau, the industry’s expansion into unregulated online platforms has created lucrative opportunities for transnational criminal organizations. These groups have exploited loopholes in jurisdictions like Cambodia and the Philippines, where gambling operations flourished until government crackdowns in the late 2010s.
Despite efforts by Southeast Asian governments to control the illicit industry, organized crime syndicates have managed to adapt. These groups have utilized the infrastructure of physical casinos, particularly in Cambodia’s Sihanoukville, to house online gambling operations that continue to thrive underground.
Scam losses mounting
According to to the UNODC report, the rise of cyber-enabled fraud and related criminal enterprises has generated billions in losses for victims across East and Southeast Asia.
“Organized crime groups are converging and exploiting vulnerabilities, and the evolving situation is rapidly outpacing governments’ capacity to contain it,” stated Masood Karimipour, UNODC Regional Representative for Southeast Asia and the Pacific.
Karimipour emphasized the scale of the challenge, noting that “leveraging technological advances, criminal groups are producing larger-scale and harder-to-detect fraud, money laundering, underground banking, and online scams.”
According to the UN representative, this has resulted in the emergence of “a criminal service economy” in the region, which is now a critical testing ground for transnational criminal networks looking to expand their influence.
The report details recent cases illustrating how underregulated online gambling platforms and high-risk virtual asset service providers (VASPs) are being exploited by major organized crime groups.
These platforms allow criminals to move, launder, and integrate billions of dollars in illicit proceeds into the financial system with minimal accountability. The findings indicate that illegal online casino operators are diversifying their activities to include cyber-enabled fraud and crypto-based money laundering services.
Extensive evidence has uncovered organized crime networks operating within casino compounds, special economic zones, and border areas to conceal their illicit activities. “It is more critical than ever for governments to recognize the severity, scale, and reach of this truly global threat,” Karimipour added.
The report also highlights the alarming issue of human trafficking, where organized crime groups forcibly recruit thousands of workers to carry out scams. These victims are often lured into illegal scam compounds through fake job advertisements, only to find themselves trapped in exploitative situations.
Additionally, the report notes a disturbing rise in AI-driven crimes involving deepfakes, with mentions of deepfake-related content targeting criminal groups in Southeast Asia increasing by over 600 percent in the first half of 2024 across monitored online platforms.
Authorities have struggled to contain the spread of illegal online casinos. In Indonesia, over 3 million citizens are believed to be engaged in illegal gambling, prompting the government to form a task force aimed at eradicating the practice.
Similarly, the Philippines, once a hub for legalized offshore gambling under its Philippine Offshore Gaming Operator (POGO) system, saw the industry collapse under widespread criminality.
The POGO industry, which was designed to regulate online gambling targeting foreign markets, has been rife with corruption, leading to a nationwide ban. Nevertheless, illegal POGOs continue to flourish.
‘This ultimately led to President Marcos of the Philippines declaring a nationwide ban on POGOs. Despite the ban, authorities have expressed concerns over how entrenched illegal offshore gaming operators have become, with hundreds of POGOs continuing to operate despite previously having their licenses canceled’, the report adds.
UN recommendations
To combat the evolving threats of organized crime, a set of recommendations has been proposed by the UNODC to enhance the awareness, understanding, and capacity of governments, oversight authorities, and law enforcement in Southeast Asia, particularly in the Mekong region.
These recommendations stem from ongoing dialogues with regional governments and align with the ASEAN + China Roadmap to Address Transnational Organized Crime and Trafficking in Persons.
First, UNODC considered it essential to conduct thorough analyses of organized crime activities related to online gambling, cyber-enabled fraud, and the integration of AI technologies, including their infiltration into legitimate business sectors.
Establishing a platform for intelligence sharing and threat monitoring focused on these crimes is crucial. Collaborative research should be undertaken to better understand illicit financial flows within the region, with a focus on facilitators and offshore jurisdictions.
Additionally, regular monitoring of organized crime activities in casinos and high-risk areas, such as Special Economic Zones (SEZs), is necessary. Public awareness campaigns should also be promoted to highlight the connections between underregulated industries and organized crime.
On the policy and legislative front, national action plans and a regional strategy should be developed to address organized crime, money laundering, and related issues.
It is important to revise and strengthen legislation concerning money laundering, virtual assets, and casino management. Mechanisms should be established to review investor profiles in casinos and online platforms to identify beneficial ownership. Furthermore, adapting mutual legal assistance frameworks will facilitate the freezing and seizure of assets, the report adds.
In terms of enforcement and regulatory responses, creating a regional forum for sharing information about the use of casinos and virtual assets in money laundering is essential. Authorities must identify and prevent the operation of unlicensed casinos and high-risk virtual asset service providers.
Efforts should be made to increase the identification of trafficking victims and strengthen cross-border investigations, while enhancing capabilities for recovering and analyzing digital forensic evidence is also necessary, along with providing specialized training for authorities on online gambling operations and advanced money laundering methods.
