As a seasoned analyst with years of experience tracking financial crimes and cybersecurity threats, I find myself deeply concerned about the UNODC’s report on the rising use of cryptocurrencies in facilitating illicit activities across Southeast Asia. My work has taken me to some of the darkest corners of the digital world, and I have seen firsthand how criminal enterprises adapt to new technologies to evade law enforcement.
The UN Office on Drugs and Crime (UNODC) voiced significant worry over the part cryptocurrencies play in aiding illegal activities throughout Southeast Asia.
The text indicates that criminal activities, such as those occurring in unregulated casinos, junkets, and illicit online gambling platforms, have been progressively utilizing cryptocurrencies as a means to facilitate their illicit operations within the underground banking system.
UNODC Raises Alarm Over Crypto
According to the UN’s recent findings, an increasing number of high-risk Virtual Asset Service Providers (VASPs) are offering a platform for criminal organizations to carry out their illegal activities anonymously, thereby strengthening such illicit operations.
In essence, the UNODC is advocating immediate steps, suggesting that we should intensify surveillance over criminal activities happening in casinos, gambling dens (junkets), and cybercrime sectors, particularly those involving fraud. Additionally, they propose that authorities be equipped with advanced training to recognize complex money laundering techniques facilitated by cryptocurrencies.
The report asserted that, while not all scams in the region involve crypto, it remains a favored payment option among scammers due to the ease of rapid cross-border transactions. This reality, compounded by misinformation and inadequate law enforcement cooperation, further highlighted the urgent need for greater regulatory oversight in the crypto space, the UNODC added.
Speaking in a statement, Masood Karimipour, the United Nations Office on Drugs and Crime’s (UNODC) Regional Representative for Southeast Asia and the Pacific, expressed his thoughts.
Utilizing cutting-edge technology, criminal organizations are creating more complex and harder-to-spot fraudulent activities such as money laundering, underground banking, online scams, and other illicit enterprises. This trend has given rise to a thriving black market economy in the region, making it a significant battleground for transnational criminal syndicates aiming to expand their power and venture into new business ventures.
Tether in Spotlight, Again
The United Nations agency noted that Tether (USDT), especially on the TRON network, is frequently used by international criminal organizations operating in East and Southeast Asia, due to its effectiveness in transferring illicit funds. These groups, engaged in cybercrime and money laundering activities, tend to prefer Tether for this reason.
Although Tether and other stablecoins are increasingly used by legitimate individuals, the United Nations Office on Drugs and Crime (UNODC) reports that a detailed analysis of transactions shows USDT has a much greater association with risky parties. These include online gambling platforms, fraudulent cyber activities, and high-risk trading exchanges.
The report additionally emphasizes that Tether has been part of numerous transactions worth hundreds of millions of dollars involving entities associated with extensive criminal activities, including illegal drug and human trafficking, cybercrimes, and dissemination of child exploitation content.
It’s worth mentioning that certain transactions link back to digital wallets connected to organizations under U.S. sanctions (OFAC) and the Lazarus Group from North Korea, a group notorious for cyberattacks.
Crypto Criticism Misplaced: Report Shows
Although cryptocurrencies are frequently criticized as a means for illegal activities, research suggests that cash continues to be the preferred choice among criminals. For example, a recent report from Homeland Security Investigations (HSI) emphasizes that regulated crypto platforms offer valuable assistance to law enforcement by utilizing the transparency of blockchain technology to combat crime and bolster national security.
Contrary to the common misunderstandings about their role in illegal finance, it’s important to note that data from Merkle Science shows a relatively small percentage of transactions involving USDT (0.61%) and USDC (0.22%) were flagged as possibly illicit between July 2021 and June 2024. This suggests a considerably lower rate of suspected illegal activity compared to traditional finance.
In 2023, Chainalysis found that just 0.34% of all cryptocurrency transactions were associated with illegal activities. This suggests that worries about the crypto world might be exaggerated when weighed against conventional finance.
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2024-10-12 23:54