Southeast Asian criminals are increasing their use of cryptocurrencies

• Organized crime groups in Southeast Asia are increasingly relying on cryptocurrency for money laundering, according to the United Nations
• The United Nations Office on Drugs and Crime says high-risk virtual asset service providers (VASPs) in the region have been critical in serving criminal enterprises
• Governments are struggling to regulate the rapid growth of crypto-related crimes, driven by transnational crime syndicates

Transnational crime syndicates in Southeast Asia have increased their use of cryptocurrencies for illegal activities, according to a new report. According to the United Nations Office on Drugs and Crime (UNODC), criminal groups, especially in regions such as the Mekong, have taken advantage of high-risk Virtual Asset Service Providers (VASPs) to launder billions of dollars annually. Despite government efforts to regulate, the cryptocurrency-powered underground economy is expanding rapidly, increasing the challenges of combating cybercrime, fraud and organized crime in the region.

Cryptocurrency in criminal enterprises

UNDOC’s claims come through a new one report‘Transnational Organized Crime and the Convergence of Cyber-Enabled Fraud, Underground Banking and Technological Innovation in Southeast Asia: A Shifting Threat Landscape’, in which they argue that the use of cryptocurrency by organized crime groups in Southeast Asia has increased dramatically, especially in regions such as Cambodia, Laos and Myanmar.

UNODC reports that crime syndicates are turning to under-regulated VASPs to launder the proceeds of drug trafficking, human trafficking and cyber fraud. According to the report, these VASPs, which often operate in areas with limited regulatory oversight, have become an essential part of the transnational criminal ecosystem. The organization recently reported on the increased use of USDT for criminal operations.

“The rise of cryptocurrencies, combined with the rise of high-risk VASPs, has created a perfect storm for organized crime,” said a regional security expert. “It enables rapid, cross-border transactions that are nearly impossible to trace, making the job of law enforcement much more difficult.”

High-risk providers fuel crime

The report highlights that VASPs play a crucial role in enabling criminal networks to move illicit funds undetected. The Mekong region in particular has become a hub for unregulated VASPs, allowing criminal groups to obscure the origins of stolen funds. “Criminals are taking advantage of these providers to engage in everything from money laundering to cybercrime,” the report warns.

This rapid growth of the crypto crime economy has not only increased financial losses but also challenged regulators across the region. In 2023 alone, the financial consequences of cybercrime in Southeast Asia was valued at between $18 billion and $37 billion, with much of the proceeds flowing through cryptocurrency channels.

Governments struggling to respond

Attempts to curb the use of cryptocurrency in criminal enterprises have had limited success. As several countries in Southeast Asia have tightened regulations, criminal groups have shifted their activities to areas with weaker controls. “Regulatory gaps are being exploited and organized crime is constantly adapting,” a law enforcement official added.

Despite these challenges, experts agree that without stronger oversight of VASPs, Southeast Asia will remain a hotbed for crypto-driven crime. The UNODC report highlights the need for improved international cooperation to close loopholes and curb the abuse of digital currencies in the region.