A new report from the United Nations Office on Drugs and Crime (UNODC) says Asian casinos and casino junkets play a pivotal role in “the underground banking and money laundering infrastructure in East and Southeast Asia, fueling transnational organized crime in the region,” posing a “hidden, accelerating threat” in the region.
“Casinos and related high-cash-volume businesses have been vehicles for underground banking and money laundering for years,” said Jeremy Douglas, UNODC regional representative for Southeast Asia and the Pacific, “but the explosion of underregulated online gambling platforms and crypto exchanges has changed the game.
“Expansion of the illicit economy has required a technology-driven revolution in underground banking to allow for faster anonymized transactions, commingling of funds and new business opportunities for organized crime. The development of scalable, digitized casino- and crypto-based solutions has supercharged the criminal business environment across Southeast Asia, and particularly in the Mekong.”
The report says gaming businesses have become a tool of organized crime groups “to move and launder massive volumes of state-backed fiat as well as cryptocurrencies, effectively creating channels for integrating billions in criminal proceeds into the financial system.
“At the same time, the creation and success of these underground banking mechanisms has helped expand the region’s broader illicit economy, in turn attracting new networks, innovators, and service providers to the criminal ecosystem.”
According to Douglas, “Organized crime groups have converged where they see vulnerabilities, and casinos and crypto have proven the point of least resistance. When governments crack down on the activities, he noted, the bad actors simply move along.
The study offers a list of recommendations to heighten awareness of the problem and develop policy to combat it. According to MSN, “inaccessible and autonomous armed group territories” use technology to launder money and commit cyber fraud and cybercrime. Some of the operations are staffed by unwilling workers who responded to seemingly legitimate job postings, only to be forced into low-wage and no-wage roles running online scams.
Meanwhile, Benedikt Hofmann, UNODC deputy regional representative, warned that “the gap between organized crime and enforcement authorities is widening quickly. If the region fails to address this criminal landscape, the consequences will be seen in Southeast Asia and beyond as criminals look to reinvest profits and innovate operations … At this point, we are just scratching the surface.”
Some nations are working to address such problems. Agencies in the Philippines are on orders to strengthen the nation’s anti-money laundering (AML) and counter-terrorism financing (CTF) protocols in order to be removed from the “grey list” of the Paris-based Financial Action Task Force (FATF).
The agency compiles black and grey lists of countries at risk for financial crimes. Three countries now inhabit the black list, described on the FATF website as “high-risk jurisdictions subject to a call for action: the Democratic People’s Republic of Korea, Iran and Myanmar.
In addition to the Philippines, the grey list includes Barbados, Bulgaria, Burkina Faso, Cameroon, Croatia, the Democratic Republic of Congo, Gibraltar, Haiti, Jamaica, Mali, Mozambique, Nigeria, Senegal, South Africa, South Sudan, Syria, Tanzania, Turkey, Uganda, the United Arab Emirates, Vietnam and Yemen.
