UN Agency Advocates for Criminalizing Unlicensed Virtual Asset Service Providers in Southeast Asia to Combat Cyber Fraud
The United Nations Office on Drugs and Crime (UNODC) has issued a set of recommendations aimed at combating cyber-enabled fraud in Southeast Asia. The agency has also highlighted the diversification of scams, with fraudsters embracing new tactics and leveraging technologies such as artificial intelligence (AI) to carry out their illicit activities.
According to a report published by the UNODC on Monday, the agency has called on Southeast Asian nations to criminalize the operation of money service businesses or virtual asset service providers (VASPs) without a proper license. Some VASPs, including those associated with known criminals, are enabling transactions for fraudulent organizations and high-risk gambling websites.
The report also revealed that one unidentified entity facilitated transactions worth “at least hundreds of millions of dollars” with criminal enterprises involved in various illicit activities. These activities range from large-scale drug trafficking, human trafficking, cybercrime, and child sexual abuse material to entities sanctioned by the U.S. Office of Foreign Assets Control (OFAC) and North Korea’s Lazarus Group-associated wallets.
Masood Karimipour, the regional representative of UNODC, emphasized the urgent need for governments to recognize the severity and global reach of this evolving criminal ecosystem in Southeast Asia. He called for prioritizing solutions to tackle this significant threat.
Furthermore, the UNODC recommended enhanced monitoring of organized crime’s involvement in casinos, junkets, cyber fraud operations, and other businesses associated with fraudulent activities. The agency also advocated for better training of authorities in online gambling operations and money laundering techniques, particularly those enabled by advanced technologies like cryptocurrencies.
While not all scams originating from the region involve cryptocurrencies, scammers frequently choose crypto as a preferred payment method due to its ability to facilitate rapid cross-border transactions, widespread misinformation, and limited understanding of its functioning. The breakdown of cross-border law enforcement cooperation, investigation, case intake, and asset recovery further aggravates the situation, as highlighted in the report.
In Southeast Asia, the online fraud industry has flourished, often operating from modest office buildings or casino complexes. Although the scammers and victims originate from different locations, a previous UN report estimated that approximately 220,000 individuals work in scam centers in Cambodia and Myanmar alone. Some of these individuals end up being coerced into participating in fraud after being lured to these countries under the guise of legitimate job opportunities.
Among the scams prevalent in the region is a type of romance scam known as pig butchering, where operators befriend unsuspecting victims online, ultimately convincing them to invest in fraudulent platforms.
The UNODC’s report also highlighted the diversification of scams, with fraudsters adopting various approaches such as impersonation scams, job or task scams, asset recovery scams, and targeted approval phishing scams. Additionally, the use of emerging technologies like AI and deep fakes has become increasingly prevalent in carrying out scam operations.