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Casinos And Cryptocurrency: East Asia And Southeast Asia Are Dominant Spots Of Money Laundering, Underground Banking As Well As Cyber Fraud

UNODC claimed that transnational organized crime is ruining East and Southeast Asia’s casinos, junkets, and cryptocurrency industries with underground banking infrastructure to conceal their original identity to launder money.

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United Nations Report On Rising Illegal Casino Business in the Southeast Asia

UNODC released a report on 15 Jan 2024 demonstrating that casinos, junkets, and cryptocurrencies have become an essential part of the money laundering and shadowed banking infrastructure in East and Southeast Asian regions, known to support transnational criminal activities.

The report called ‘Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden, Accelerating Threat’, addresses that online casinos, crypto exchanges, and junkets, are expanding rapidly and are being used by criminals a lot to move huge amounts of regular money and cryptocurrencies around through underground banking channels to hide their illegalities and expand the criminogenic business.

How Southeast Asia is A High-Risk Jurisdiction For Casino Gambling?

Southeast Asia is facing big challenges because of international crime and hidden illegal economies. In recent years, the region has become a hotspot for new criminal technologies, this shift to digital and scalable methods has made it easier for criminals to do illegal business in Southeast Asia, especially in the Mekong area. It’s attracting more criminal groups and people who provide services to these illegal markets.

UNODC analysis indicates that there were over 340 licensed and unlicensed land-based casinos operating in Southeast Asia as of early, most having moved to offer live dealer broadcast or numerous online proxy betting services. The formal online gambling market is anticipated to reach over US $205 billion in the future as per the latest available statistics with the Asia Pacific region reportedly being the largest client of this segment between 2022 – 26 at around a massive rate of 37%.

Jeremy Douglas from the United Nations Office on Drugs and Crime claims that online gambling as well as crypto exchanges provide criminals with brand-new means of concealing their money and carrying out business activities anonymously and faster. This is particularly rife in the Mekong area. He also noted that criminals are exploiting loopholes, especially with casinos and digital currencies. As crackdowns in countries like Cambodia and the Philippines have shown, criminals simply find other places where they assume that there will be no consequences.

Online Gambling Industry Growth And Rising Organized Criminal Involvement In Mekong

The online Casino market including digital betting is rapidly gaining momentum. It is estimated that it will surpass US $205 billion by 2030, and the highest development rate can be seen in the Asia Pacific region. The biggest concern is the rise of unregulated online casinos that sweep the Mekong region which is considered high-risk jurisdictions of Southeast Asia. Most of such casinos are operated by junket owners who have criminal backgrounds. They don’t use these platforms only for earning profits, but also they conceal their criminal activities by combining illegitimate funds with other gambling dollars.
But there’s a problem: a lot of these unlawful online casinos are also engaged in cyber fraud and other crypto crimes. It is difficult to determine the magnitude of this challenge as most operations are situated in remote locations. However, current policing activities like the raid of illegal gambling cooperatives and catching criminals indicate that this area is sizable. With the advent of new technologies including mirror websites, cryptocurrencies, and third-party betting software setting up an online casino has become relatively easy. The development of Internet payment technologies such as e-wallets has also contributed to the growth of this market. This high-demand industry draws a lot of young job seekers, but some end up becoming victims of the recruitment scam and are forced into crime.

Sanctions Imposed on Junket Leader

During 2019 and 2023, these initiatives resulted in the arrest and conviction of Macau SAR junket tycoons, Alvin Chau Suncity and Levo Chan Tak Chun, the two leading global operators. Although they were sentenced to 18 years and 14 years in jail on hundreds of charges relating to organized crime & illegal betting, the industry is far larger than these two men along with their businesses almost all operators &players are moving gradually outwards into regions around lightly-regulated Special Economic Zones in Southeast Asia. This is reflected in the large number of licensed junkets that dropped from a peak value of 235 in Macau SAR, but which decreased to only thirty-six as of 2023; with estimatedly about twelve currently functioning.

As a result, there is an increasing demand for these underground banking groups. While the police and regulators are starting to target illegal gambling houses and online swindles, criminals seem to be relocating their activities in remote areas such as lawless zones controlled by armed groups, especially near Golden Triangle. This pressure will make them find other means to hide.

As per UNODC another report, the gambling industry of this region had a sharp rise approximately six years ago when China intensified its anti-illegal activities and other illegal cross-border money transfers. Attempting to find more loose countries, several casino firms viewed the Mekong area as their first option. According to Benedikt Hofmann with UNODC, if these problems are not addressed the repercussions will go beyond Southeast Asia. These nations in the region are supposed to collaborate better due to this report.

To wrap it up, the research paper was compiled as a result of numerous studies and consultations with various authorities, specialists, etc. It analyses illicit banking practices and provides recommendations on how to improve things, including improving law enforcement. In the study, there is a detailed description of various policy development and enforcement efforts undertaken by governments in that region to combat illegal capital flight through casino-based activities as well as corruption and money laundering which have contributed in some ways towards these trends. UN officials argued that transnational criminal gangs use Southeast Asian crypto and online gambling businesses as a ‘shadow banking’ system to mask their identity to clean the money.

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Category

Sanctions

Industry

Gaming & Gambling

Published Date

January 16, 2024

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