The United Nations Office on Drugs and Crime (UNODC) has called on Southeast Asian nations to criminalize the operation of unlicensed money service businesses or virtual asset service providers (VASPs) due to concerns about these entities facilitating transactions for illicit activities. A recent report by the agency highlighted that some VASPs, including those associated with criminal networks, are involved in activities such as fraud, high-risk gambling operations, drug trafficking, cybercrime, and child sexual exploitation. The report also mentioned transactions worth hundreds of millions of dollars with criminal organizations and wallets linked to North Korea’s Lazarus Group, a notorious hacking syndicate. The UNODC emphasized the need for governments to recognize the severity of this global threat and implement solutions to address the evolving criminal ecosystem in the region.
In addition to suggesting the criminalization of unlicensed VASPs, the UNODC recommended enhanced surveillance of organized crime involvement in sectors like casinos, cyber fraud operations, and businesses connected to scam activities. The agency also called for improved training for law enforcement to combat online gambling schemes and money laundering facilitated by cryptocurrencies. While not all scams in the region involve cryptocurrencies, the report noted that digital currencies are commonly used by scammers due to the ease of conducting cross-border transactions, misinformation about cryptocurrency operations, and low levels of understanding among users. The breakdown of international law enforcement cooperation and asset recovery processes has further exacerbated the issue, according to the report.
Online fraud has significantly increased in Southeast Asia, with operations often conducted from inconspicuous office buildings or within casino complexes. A previous UN report estimated that around 220,000 individuals in Cambodia and Myanmar are employed in scam operations, often lured into these roles under false job promises. One prevalent scam method in the region is “pig butchering,” a form of romance scam where fraudsters build trust with victims online before persuading them to invest in fraudulent platforms. The report also identified a rise in other scam techniques such as impersonation, job scams, asset recovery schemes, and phishing attacks. Scammers are increasingly using emerging technologies like artificial intelligence and deepfakes to enhance the effectiveness of their schemes.
Phishing attacks continue to pose a significant threat to crypto users in Southeast Asia, resulting in substantial financial losses. In September alone, more than 10,000 individuals lost over $46 million to various crypto phishing scams, according to reports from Scam Sniffer, a Web3 anti-scam platform. The platform revealed that victims suffered losses from scams involving impersonation, job scams, asset recovery schemes, and phishing attacks. The increasing use of advanced technologies by scammers, coupled with the lack of understanding among users about cryptocurrency operations, has created a fertile ground for fraud in the region. The UNODC’s recommendations underscore the importance of increasing awareness, enhancing information sharing among law enforcement agencies, and implementing stricter regulations to combat criminal activities facilitated by unlicensed VASPs and online fraud operations in Southeast Asia.
