UNODC Reveals Casinos and Cryptocurrency-Driven Money Laundering in East and Southeast Asia

January 15, 2024

UNODC, United Nations Office on Drugs and Crimes, has issued a report, ‘Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat’. The report highlights the connection between the rise of illegal online casinos, e-junkets, and cryptocurrency exchanges, all of which have grown in recent years, aligning with the increased prevalence of cross-border criminal activities in the region.

As per the report, East and Southeast Asia have witnessed casinos, junkets, and cryptocurrency exchanges as the key components in underground banking and money laundering, contributing to the expansion of transnational organized crime.

In this context, Jeremy Douglas, UNODC Regional Representative for Southeast Asia and the Pacific, reportedly stated,

“Casinos and related high-cash-volume businesses have been vehicles for underground banking and money laundering for years, but the explosion of underregulated online gambling platforms and crypto exchanges has changed the game,”

He further stated that

“The development of scalable, digitized casino- and crypto-based solutions has supercharged the criminal business environment across Southeast Asia, and particularly in the Mekong.”

How Online Casinos, e-junkets, and Cryptocurrencies Facilitate Criminal Proceeds?

The report shows that several cases revealed organized criminal groups have misused online casinos and relevant businesses for their illicit activities. They used such platforms to move and launder substantial amounts of fiat as well as digital currency backed by the government, facilitating the movement of billions of illegal funds into the financial system.

Meanwhile, the creation and effectiveness of these underground banking systems have contributed to the growth of the broader unlawful economy in the region.

The analyzed cases also highlight the diversification of illegal online casinos into alternative business domains like cyber fraud and cryptocurrency laundering. Substantial evidence indicates the influence of organized crime on casino complexes, special economic zones, and broader regions such as those governed by armed groups in Myanmar.

While talking about this, Dhoughlas stated,

“Organized crime groups have converged where they see vulnerabilities, and casinos and crypto have proven the point of least resistance.”

UNODC’s analysis suggests that, by early 2022, Southeast Asia operated more than 340 land-based casinos, both licensed and unlicensed.  The majority of the casinos shifted to online platforms, offering live dealer streaming and a variety of proxy betting services.

As per the most recent industry data, formal online gambling is expected to surpass $205 billion by 2030. The Asia Pacific region is anticipated to contribute the most to the market growth, reaching 37% between 2022 and 2026. However, governments have established policy developments and enforcement measures to combat casino-based capital outflows, corruption, and money laundering, influencing these trends.

Also read: UK Financial Fraud Tops £1.2 Billion in 2022, With 80% of APP Fraud Cases Starting Online