UN Agency Recommends Criminalization of Unlicensed VASPs in Southeast Asia to Counter Cyber Fraud

As a seasoned crypto investor with a knack for uncovering hidden truths in the digital realm, I must admit that this UNODC report sends shivers down my virtual spine. Having navigated the cryptosphere for years, I’ve encountered more than a fair share of scams and fraudulent activities, but the scale and sophistication detailed in this report are genuinely alarming.

The United Nations Office on Drugs and Crime urged Southeast Asian countries to consider it a crime for any entity to run a money transfer service or virtual asset service provider without the necessary authorization.

As a researcher, I’ve uncovered that certain Virtual Asset Service Providers (VASPs), some of which have ties to criminal elements, are allegedly supporting illicit activities such as fraudulent transactions and high-stakes gambling platforms, according to a recent report released by the agency on Monday.

An unknown party is said to have participated in transactions worth at least several hundred million dollars with criminal networks, as per the report. These networks include organizations associated with or actively participating in illegal activities such as drug trafficking, human trafficking, cybercrimes, and child exploitation content. Additionally, these transactions involve entities subject to U.S. sanctions by the Office of Foreign Assets Control (OFAC) and wallets linked to North Korea’s Lazarus Group.

Masood Karimipour, UNODC’s regional representative, emphasized in a statement that it is now more crucial than ever for governments to understand the gravity, extent, and impact of this worldwide danger. He urged them to focus on strategies that tackle the rapidly changing criminal network within their respective regions.

The agency also recommended greater monitoring of organized crime involvement in casinos, junkets, cyber fraud operations and other businesses linked to scam operations, as well as better training for authorities in online gambling operations and money laundering methods enabled by sophisticated technologies, particularly cryptocurrencies.

In many instances, scammers prefer to use cryptocurrencies for their illicit activities because of several factors. These include the convenience of swift international transactions, misinformation and limited understanding about how cryptos work, and sometimes, the lack of cooperation between countries in enforcing laws, investigating cases, accepting reports, and recovering assets. This was highlighted in a recent report.

Run out of unassuming office blocks or casino complexes, online fraud has mushroomed into a huge industry in the region, though scammers and victims are usually from elsewhere. A previous UN report estimated that around 220,000 people work in scam centers in Cambodia and Myanmar alone, some against their will after having been lured to the countries under the pretense of a legitimate job.

One type of deception that can be found among many others is called “pig butchering.” This is a form of romance scam in which the con artists establish relationships with unwitting targets on the internet, eventually persuading them to invest in questionable or fake investment schemes.

The investigation revealed that con artists are expanding their tactics, incorporating strategies like impersonation frauds, job or task cons, asset-recovery swindles, and sophisticated phishing scams focused on specific approvals. Additionally, it noted a rise in the adoption of modern technology, such as artificial intelligence and deepfakes, to aid in their activities.