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In a new report, the United Nations Office on Drugs and Crime has revealed that casinos, gambling junkets, and cryptocurrency are now a key part of the underground banking and laundering infrastructures in East and Southeast Asia. This is fueling transnational organised criminality in the region.
The study, entitled “Casinos and Money Laundering in East and Southeast Asia, Underground Banking and Transnational Organized Criminality: A Hidden and Accelerating Threat”, highlights the link between illegal online casino, e-junkets, and cryptocurrency exchanges, which have proliferated over the past few years, along with a surge in cross-border criminality in the region.
The explosion of unregulated crypto exchanges and online gambling platforms has changed the game. The expansion of the illegal economy required a technological revolution in underground banking. This would allow faster anonymized transactions and commingling funds as well as new business opportunities for organised crime. The advent of scalable digitalized crypto-based casino solutions, particularly in Southeast Asia, has boosted the criminal environment.
In the report it is stated that a number of recent cases show how online casinos and other related businesses are used by organised crime groups in order to move and wash massive amounts of fiat and cryptocurrencies. This effectively creates channels for the integration into the financial systems billions in criminal proceeds. The success of these illicit banking systems has also helped to expand the region’s wider illegal economy.
The cases examined show how illegal online casinos have expanded their business to include cyberfraud, cryptocurrency laundering and special economic zones. There is also evidence that organised crime has a strong influence in casino compounds, border areas and special economic zones, such as those controlled by armed group in Myanmar, to hide illicit activities.
“Organized criminal groups have concentrated their efforts in areas where they perceive vulnerabilities. Casinos and cryptography have been the most effective means of avoiding detection.” The operations against the syndicates of Cambodia and the Philippines caused a partial dislocation. We have also seen criminals move infrastructure to other places, where they perceive opportunity.
UNODC estimates that there were over 340 land-based casinos in Southeast Asia, both licensed and unlicensed, as of early 2022. Most have shifted to online services such as live-dealer streaming or proxy betting. According to the latest industry data, it is estimated that the formal online gaming market will grow to over US $205 billion in 2030. The Asia Pacific region, which represents the largest market share between 2022 and 2026, is expected to account for 37% of the market growth. The study describes several policies and enforcement measures that governments in the Asia Pacific region have implemented to combat illegal casino-based money outflows, corrupt practices, and money laundering. These trends are partly driven by these policy developments.
The technical policy document describes the mechanics, complexities and drivers of underground bank in the region. It was developed after extensive analysis and examination of criminal indictments and case files, court filings and related public disclosure, as well as other data collected over a period of more than one year in consultation with partners and authorities. The study’s development included an extensive mapping of and analysis of thousands “grey business” online groups including dark web forums, clear web forums, and marketplaces used for illicit activity. The study includes a list that is intended to help governments address this situation. It contains recommendations for strengthening legislation, policy and enforcement, as well as regulatory and enforcement responses.
It’s evident that the gap between organized criminals and law enforcement is rapidly widening. The consequences of failing to address the criminal landscape in the region will be felt throughout Southeast Asia, and even beyond. Criminals will look to reinvest their profits and innovate their operations. We hope that the report will serve as a reference to help countries in Southeast Asia and UNODC engage more deeply with international partners. We are only scratching the surface at this stage,” said Benedikt Homann, UNODC’s Deputy Regional Representative.
