Southeast Asia Faces Escalating Threat from Illegal Online Gambling and Cyber Fraud, Warns UN

Southeast Asia is witnessing a worrying surge in cyber-enabled fraud and organized crime, with illegal casinos and online gambling platforms at the heart of the issue, according to a recent United Nations report.

The United Nations Office on Drugs and Crime (UNODC) has released a report on Transnational Organized Crime, highlighting the role of underground casinos, junkets, and high-risk virtual asset service providers (VASPs) in fueling the rise of cybercrime and money laundering in the region.

The financial toll of these activities is staggering. UNODC estimates that in 2023 alone, financial losses from scams targeting victims across East and Southeast Asia ranged from $18 billion to $37 billion. A large portion of these losses is tied to organized crime operations active within the region.

Criminal organizations are increasingly using casinos and other gambling venues as platforms for money laundering and other illicit activities, exacerbating the difficulties faced by law enforcement agencies. These illegal online casinos have become key channels for transnational crime syndicates to inject illicit funds into the formal financial system. These platforms have been directly linked to activities such as money laundering, human trafficking, and cyber fraud, generating immense profits for criminal organizations.

Sophisticated underground banking networks and the use of cryptocurrencies have made these operations even more difficult to detect and control.

As cyber-enabled fraud evolves, the proliferation of deepfake technology and AI-driven scams is also on the rise. The report warns that these developments are making criminal operations more sophisticated and harder to trace. It further points out that criminal activity is shifting into more hidden, technology-driven spaces, with deepfake-related content targeting criminal groups in Southeast Asia increasing by over 600 percent in early 2024.

The UNODC report highlights particular areas of concern in border regions and Special Economic Zones (SEZs) such as the Golden Triangle and parts of Myanmar, Cambodia, and Lao PDR. In countries like Cambodia and the Philippines—previous hubs for regulated offshore gambling—the situation has worsened as illegal operations have taken over.

Despite an official ban on online gambling, Cambodia continues to struggle with unregulated platforms, while illegal online gambling thrives in regions controlled by criminal networks.

The rise of illegal operations is traced back to junket operators in Macau, whose expansion into unregulated online platforms has created lucrative opportunities for transnational crime organizations. These groups have exploited regulatory loopholes in places like Cambodia and the Philippines, where gambling had been flourishing until government crackdowns began in the late 2010s. However, despite these efforts, organized crime syndicates have proven adaptable, using physical casino infrastructure—particularly in Cambodia’s Sihanoukville region—as bases for underground online gambling operations.

Mounting Scam Losses

The UNODC report underscores the massive financial losses caused by cyber-enabled fraud and related criminal activities across East and Southeast Asia. “Organized crime groups are converging and exploiting vulnerabilities, and the evolving situation is rapidly outpacing governments’ capacity to contain it,” warned Masood Karimipour, UNODC Regional Representative for Southeast Asia and the Pacific. He emphasized the scale of the challenge, stating that “leveraging technological advances, criminal groups are producing larger-scale and harder-to-detect fraud, money laundering, underground banking, and online scams.”

Karimipour further noted that this situation has led to the rise of “a criminal service economy” in the region, which is now serving as a critical testing ground for transnational criminal networks looking to expand their influence. Recent cases have illustrated how underregulated online gambling platforms and high-risk VASPs are being exploited by organized crime groups to launder and integrate billions of dollars of illicit proceeds into the financial system with minimal oversight.

Evidence has shown that these networks are operating within casino compounds, SEZs, and border areas to conceal their illegal activities. “It is more critical than ever for governments to recognize the severity, scale, and reach of this truly global threat,” Karimipour added.

Human Trafficking and AI-Driven Crimes on the Rise

The report also sheds light on the human trafficking crisis exacerbated by these organized crime networks. Criminal groups are forcing thousands of workers into illegal scam compounds, often lured by fake job advertisements. Once trapped, these individuals find themselves in exploitative situations, forced to carry out cyber-enabled scams.

Additionally, the use of AI in criminal operations has increased, with a disturbing rise in crimes involving deepfakes. The report revealed a sharp surge in mentions of deepfake content linked to criminal groups across monitored online platforms, marking a 600 percent increase in the first half of 2024 alone.

Governments in Southeast Asia have struggled to keep up with the spread of illegal online casinos. In Indonesia, it’s estimated that over 3 million citizens are involved in illegal gambling, prompting the formation of a government task force to combat the problem. Similarly, in the Philippines—once a hub for legal offshore gambling under the Philippine Offshore Gaming Operator (POGO) system—the industry has collapsed due to widespread criminal activity. Corruption within the POGO system eventually led to a nationwide ban, but illegal POGO operators continue to thrive.

“Despite the ban, authorities have expressed concerns over how entrenched illegal offshore gaming operators have become, with hundreds of POGOs continuing to operate despite previously having their licenses canceled,” the report notes.

UN Recommendations

To address the escalating threat of organized crime, the UNODC has proposed several recommendations aimed at improving government awareness, understanding, and capacity to combat the problem in Southeast Asia, particularly in the Mekong region. These recommendations align with the ASEAN + China Roadmap to Address Transnational Organized Crime and Trafficking in Persons.

Among the proposed measures, the UNODC suggests conducting thorough analyses of criminal activities related to online gambling, cyber-enabled fraud, and AI technologies, including their infiltration into legitimate businesses. Establishing a platform for intelligence sharing and collaborative research focused on tracking illicit financial flows is also crucial, particularly in offshore jurisdictions.

The report stresses the importance of monitoring organized crime activities in casinos and SEZs and launching public awareness campaigns to highlight the links between underregulated industries and criminal organizations.

On the policy front, the UNODC calls for the development of national action plans and a regional strategy to combat organized crime and money laundering. Strengthening legislation around money laundering, virtual assets, and casino management is vital, as is establishing mechanisms to identify beneficial ownership of casinos and online platforms.

In terms of enforcement, the creation of a regional forum for sharing information on the use of casinos and virtual assets in money laundering is essential. Authorities should work to identify unlicensed casinos and high-risk VASPs while also enhancing cross-border investigations. The UNODC emphasizes the need for specialized training for law enforcement on online gambling operations and advanced money laundering techniques.

By fLEXI tEAM