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UN Report Blames Online Gambling in SE Asia for Increase in Cyber Fraud

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In a scathing report released this week, the United Nations Office on Drugs and Crime (UNODC) has exposed how the expanding Southeast Asian casino industry is becoming a hub for cyber fraud and money laundering activities. The report, titled "The Mekong Subregion and Cybercrime: Countering Illicit Financial Flows and Organized Crime," highlights the alarming rise of these illicit activities in the region and the role of casinos in facilitating them.

Cyber Fraud and Casinos

The UNODC report paints a grim picture of the extent of cyber fraud and human trafficking tied to the Southeast Asian casino industry. It cites the "pig-butchering" scheme, a particularly insidious type of scam that involves luring victims into fraudulent investments, as a prime example of the industry's involvement in cybercrime.

These scams are often orchestrated from within the casinos, which are often located in remote areas with weak law enforcement presence. The fall of Macau's prominent stance in the global gaming industry and COVID-19, which forced the closure of land-based casinos everywhere, has led to an increase in illegal activity linked to casinos, according to the report.

Related: United Nations Reports Increase In Illegal Gaming Activity in Southeast Asia

The report also raises concerns about the rampant human trafficking associated with these scams. Hundreds of thousands of people are believed to have been trafficked into scamming compounds, where they are forced to carry out telecommunications fraud under duress.

The report goes beyond cyber fraud to delve into the role of casinos in facilitating money laundering. It notes that casinos have long been used to launder illicit proceeds, and the Southeast Asian region is no exception. The report points out that multiple casinos in the Philippines have been implicated in laundering funds linked to the North Korean hacking group Lazarus, which stole $81 million from Bangladesh Bank.

Cryptocurrency Aiding Criminals

The growing popularity of online casinos has further exacerbated the problem. These platforms, often set up with minimal technical expertise, provide criminals with a convenient and anonymous way to launder money. The use of cryptocurrencies, particularly Tether (USDT), has further aided in these illicit activities.

According to a study conducted by an impartial firm specializing in analyzing blockchain data, over $17 billion in USDT transactions were found to have connections with clandestine currency exchanges, illicit trading of goods, unlawful payment systems, and a variety of criminal activities during the period from September 2022.

Tether has refuted these accusations and asserted their falsehood. It has pointed out the firm's collaboration with authorities is aimed at preventing any unlawful utilization of the cryptocurrency. As an example, it highlighted an incident that took place in November 2023, involving the Department of Justice and Tether in the US, where $225 million in USDT was suspended due to links with fraudulent practices originating from Southeast Asia.

The UNODC report acknowledges the challenges posed by combating cyber fraud and money laundering in the region. The decentralized nature of the Internet makes it difficult to track and prosecute perpetrators, and the anonymity offered by cryptocurrencies makes it even more challenging to identify and seize illicit funds.

Despite these challenges, the report outlines a series of recommendations for governments and law enforcement agencies to address the issue. These include strengthening international cooperation, improving financial intelligence and enhancing the regulation of online gambling.

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