Southeast Asia has emerged as a hotspot for financial innovations like crypto as the digital frontier expands. However, behind the scenes, a darker reality looms. The United Nations Office on Drugs and Crime (UNODC) urges the region to take a hard stance against Virtual Asset Service Providers (VASPs) that operate without proper licensing.
Unregulated VASPs and Their Criminal Ties
In its latest report, the UNODC called on Southeast Asian governments to make operating an unlicensed VASP a criminal offense. The agency emphasized the urgent need for stronger regulatory frameworks in the region.
The report revealed that some VASPs, including those with ties to known criminals, are enabling illicit transactions linked to high-risk gambling platforms and fraud rings. One unidentified VASP reportedly facilitated transactions worth hundreds of millions of dollars for criminal networks. These bad actors are involved in large-scale drug trafficking, cybercrime, and child sexual abuse material.
Among the most concerning revelations are connections to entities under U.S. sanctions, including wallets tied to North Korea’s notorious Lazarus Group. This criminal organization is known for its involvement in major cyber heists and attacks.
Sadly, this notorious group has leveraged the decentralized nature of digital assets to carry out illicit financial operations on an unprecedented scale.
Masood Karimipour, the UNODC’s regional representative, emphasizes the urgent need for governments to understand the seriousness, scope, and global nature of the threat posed by criminal activities. He urged the governments to prioritize developing solutions to address the ever-changing criminal landscape in their respective regions.
Crypto, the Fast Lane for Fraudsters
While virtual assets offer speed, anonymity, and global reach, they have also become the preferred payment method for fraudsters. The report highlighted that scammers favor crypto due to its easy cross-border transactions and the public’s lack of understanding about how digital assets function
The situation is further exacerbated by weak international cooperation in investigating crypto-related crimes. This has made it harder to recover stolen assets or prosecute criminals across borders.
In September, Immunefi, a Web3 security and bounty hunter platform, revealed that crypto losses in the third quarter of 2024 amounted to a massive $413 million.
Pig Butchering Scheme on the Rise in Southeast Asia
In Southeast Asia, online fraud industries have blossomed. Suspicious office blocks and casino complexes serve as nerve centers for scammers, many of whom operate in countries like Cambodia and Myanmar.
Shockingly, a previous UN report estimated that around 220,000 people are involved in scam centers in countries like Cambodia and Myanmar alone. One of the region’s most notorious scams is pig butchering.
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