A recent report by the United Nations agency highlights the rapid rise of encryption-related cyber fraud in Southeast Asia. The United Nations Office for Drugs and Crime (UNODC) estimates that the region suffered financial losses in 2023 alone. In response to this growing trend, the Bureau of Crime recommends penalties for unlicensed cryptocurrency companies that are being exploited by money launderers to facilitate illegal transactions.
“Building on the existing underground banking infrastructure, including cryptocurrency-based casinos, bets and illegal online gambling platforms, the breeding of high-risk virtual asset service providers (VASPs) in Southeast Asia has become a new car, which has already been a new car. The emergence of new vehicles reports that services the crime industry without liability,” the report said.
The report recommends that, as part of regulatory measures, proactively “determine and block operations”, unauthorized and unlicensed virtual asset service providers (VASPs), especially crypto exchanges.
Drug companies released a report this week titled “Transnational organized crime and cyber-supported fraud, the convergence of underground banking and Southeast Asian technological innovation: a changing threat landscape.” According to “broad evidence”, the report shows that organized criminal groups are using casino compounds, economic zones and border areas to cover up illegal activities.
Commenting on the situation, Masood Karimipour, regional representative for Southeast Asia and the Pacific, said: “Organized criminal groups are integrating and exploiting vulnerability, and the evolving situation is rapidly exceeding the government’s ability to contain it.”
He further stressed that cybercriminals are becoming increasingly complex in leveraging advanced technology for mass fraud, resulting in greater financial losses.
“This has led to the establishment of a crime economy, which has now become a key testing site for transnational crime networks, hoping to expand its reach and diversify it into new business boundaries,” Karimipour added.
The New York host strongly recommended that governments in Southeast Asian countries become more alert and identify practices that could reduce the number of cases of cyber fraud.
In addition to exploitation of cryptocurrencies, in the first half of 2024 alone, the report highlighted a staggering 600% increase in AI-powered cybercrime, including deep fakes. AI abuse has been identified as a key multiplier for financial crimes across the region, including Cambodia, Indonesia, Malaysia, Singapore, Thailand and Vietnam.
“The integration of generative AI not only expands the scope and efficiency of supporting cyber fraud and cybercrime; they also reduce barriers to entry to criminal networks that previously lack the technical skills to leverage more complex and profitable approaches.”
According to Statista, the crypto market in Southeast Asia is estimated to grow by 4.13% by 2025 – a valuation of Rs 4.4 billion (approximately Rs 36,944 crore).
