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UNODC: Cryptocurrency and Casinos Fuel Underground Banking in Asia

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In a new report, the United Nations Office on Drugs and Crime has revealed that cryptocurrency, casinos and junkets have become a crucial part of East and Southeast Asia’s underground banking and money-laundering infrastructure, fueling transnational organized crime.

The study, entitled “Casinos and Money Laundering in East and Southeast Asia, Underground Banking and Transnational Organised Crime: An Accelerating, Hidden Threat”, highlights the link between illicit online casinos, electronic markets and cryptocurrency exchanges, which have multiplied in the past few years, along with escalating cross-border crime throughout the region.

The explosion of unregulated crypto exchanges and online gambling platforms has completely changed the landscape. The expansion of illicit economies has necessitated a technological revolution in underground banks to enable faster anonymous transactions, the commingling and mixing of funds as well as new business opportunities. “The development of scalable, digitized crypto-based and casino solutions have supercharged criminal business environments across Southeast Asia. This is especially true in the Mekong region,” stated Jeremy Douglas UNODC’s Regional Representative for Southeast Asia.

In the report it is stated that a number of recent incidents have shown how online casinos, and businesses related to them, are used by organised crime organisations in order to launder and move large amounts of fiat and cryptocurrencies. This has created channels through which criminal proceeds worth billions can be integrated into the financial sector. The success and creation of underground banking systems has also helped to expand the illicit economy in the region, attracting innovators, service providers, and new networks.

The cases examined show how the illegal operators of online casinos have expanded their business to include cryptocurrency laundering and cyberfraud. There is also evidence that organised crime has a strong influence in casino compounds, border zones, and special economic zones, as well as those areas controlled by Myanmar armed groups to hide illicit activities.

Casinos and cryptocurrency have been the easiest way for organized crime to converge where they perceive vulnerabilities. The operations in Cambodia and the Philippines against organized crime groups have led to a partial dispersal. We have also seen the criminals move infrastructure to other areas where they perceive opportunity.

UNODC estimates that there are more than 340 land-based casinos in Southeast Asia, both licensed and non-licensed. Most of these have migrated online and offer services such as live-dealer streaming or proxy betting. The latest industry data indicates that the online gambling sector will grow from US$205 billion to US$215 billion in 2030. Asia Pacific is expected to have the highest market share between 2022 and 2026, at 37%. This study describes the policy changes and enforcement actions taken by government agencies in Asia Pacific to combat illegal casino capital outflows and corruption. These trends are partly due to these measures.

This technical policy brief explains the intricacies of and factors that drive underground banking. It was developed after a thorough examination of indictments and case files, as well as court documents, public disclosures, and data collected over a period of more than one year in collaboration with partners and authorities. The study’s creation included a detailed mapping and analysis of thousands “grey business” groups on the internet, such as clear web and dark-web forums, marketplaces and other online communities that are used to conduct illicit activities. This study includes a number of recommendations that are aimed at strengthening legislation, policy and enforcement in the area, as well as regulatory and enforcement responses.

It’s evident that the gap is rapidly widening between organized crime and law enforcement. The consequences of failing to tackle this criminal environment will affect Southeast Asia, and even beyond. Criminals are looking to innovate and reinvest their profits. The report is a valuable reference that we hope will help to deepen engagement among countries of Southeast Asia, UNODC and international partners. We are only scratching the surface at this stage,” Benedikt Homann, UNODC’s Deputy Regional Rep.

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