UNODC proposes sanctions for unlicensed crypto companies in Southeast Asia
A recent report from a UN body highlights the rapid rise of crypto-related cyber fraud in Southeast Asia. The United Nations Office on Drugs and Crime (UNODC) estimates that the region will have suffered financial losses of around $37 billion (approximately Rs. 3,10,663 crore) due to scams in 2023 alone. To counter this growing trend, the UNODC has recommended sanctioning unlicensed crypto companies, which are exploited by money launderers to facilitate illegal transactions.
“Building on the existing underground banking infrastructure, including under-regulated casinos, junkets and illegal online gambling platforms that have adopted cryptocurrency, the proliferation of high-risk virtual asset service providers (VASPs) in Southeast Asia has now emerged as a new vehicle through which this has happened. has taken place, serving criminal industries without accountability,” said the report said.
The report recommends that unregulated and unlicensed Virtual Asset Service Providers (VASPs), especially crypto exchanges, be proactively “identified and prevented from operating” as part of the regulatory measures.
The UNODC released a report this week titled “Transnational Organized Crime and the Convergence of Cyber Fraud, Underground Banking and Technological Innovation in Southeast Asia: A Changing Threat Landscape.” Based on ‘extensive evidence’, the report reveals that organized crime groups operate casino complexes, special economic zones and border areas to conceal illegal activities.
Commenting on the situation, Masood Karimipour, Regional Representative for Southeast Asia and the Pacific, UNODC, said: said“Organized crime groups are coming together and exploiting vulnerabilities, and the evolving situation is rapidly exceeding the ability of governments to contain it.”
He further emphasized that cybercriminals are becoming increasingly sophisticated in using advanced technologies to carry out large-scale fraud, resulting in greater financial losses.
“This has led to the creation of a criminal services economy, and the region (Southeast Asia) has now become a major testing ground for transnational criminal networks looking to expand their influence and diversify into new industries,” Karimipour added.
The UNODC has strongly urged governments in Southeast Asian countries to become more vigilant and prioritize practices that can reduce the incidence of cyber fraud.
In addition to the exploitation of cryptocurrencies, the report highlights a staggering 600 percent increase in AI-driven cybercrime, including deep fakes, in the first half of 2024 alone. The misuse of AI has been identified as a critical multiplier of financial crimes across the region, including Cambodia, Indonesia, Malaysia, Singapore, Thailand and Vietnam.
“The integration of generative AI has not only increased the scope and efficiency of cyber fraud and cybercrime; they have also lowered the barriers to entry for criminal networks that previously lacked the technical skills to exploit more sophisticated and profitable methods,” said John Wojcik, a regional analyst at the UNODC, commenting on the situation.
According to Statisticalthe crypto market in Southeast Asia is estimated to grow by 4.13 percent between 2025 – translating to a valuation of 4.4 billion (approximately Rs. 36,944 crore).
