UN warns: Cryptocurrency fuelling organised crime in Southeast Asia

The report highlights Tether as the “preferred choice” for money launderers and scammers

Cryptocurrency has emerged as one of the leading payment methods for banking and money laundering in Southeast Asia, the UN has warned.  

Alongside illegal online casinos, cryptocurrency exchanges have ballooned in recent years, fuelling cross-border organised crime in the region.  

The UN report, released on Monday, highlights “countless” cases that demonstrate online casinos have been used by criminals to launder massive volumes of state-backed fiat and cryptocurrencies. This has created channels for integrating billions in criminal proceeds into the financial system.  

In one of the scams, called “pig butchering”, criminals lure victims into online relationships to build trust before convincing them to invest in cryptocurrency. 

Jeremy Douglas, of the UN’s Office on Drugs and Crime, said: “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. 

“Expansion of the illicit economy has required a technology-driven revolution in underground banking to allow for faster-anonymised transactions, commingling of funds, and new business opportunities for organised crime.” 

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

Tether “preferred choice”

Tether, one of the world’s biggest cryptocurrency platforms, was singled out in the report as the “preferred choice” for money launderers in the region.  

In an online statement, Tether challenged the report and said it is “disappointed” in the UN’s assessment. Tether noted that the report ignores “its role in helping developing economies in emerging markets, completely neglected by the global financial world simply because servicing such communities would be unprofitable for them.” 

Tether’s digital token is a stablecoin, also called Tether, which is pegged 1-to-1 with the US dollar.  

Highlighting its commitment to combating the criminal use of cryptocurrencies, Tether said it has frozen more than $300m within the last few months.  

Benedikt Hofmann, also from the UN’s Office on Drugs and Crime, said: “It’s clear that the gap between organised crime and enforcement authorities is widening quickly. If the region fails to address this criminal landscape the consequences will be seen in Southeast Asia and beyond as criminals look to reinvest profits and innovate operations.”   

The report made a number of recommendations to combat these trends, including increased awareness of the issues, policies to fight them, and regulatory responses.  

Image: © alfernec via Canva

Josh Poyser Josh Poyser is an editor at FinTech Intel. He has written about fintech for several years and appeared at FinTech Connect 2023 on the 'Unlocking Success: The Art of Fintech PR' panel.