Why Organized Crime Puts Its Money Into Online Gambling

Illegal online casinos are used by criminal gangs to launder billions of dollars in profits from transnational crime.

Spotless Singapore was recently rocked by a massive money laundering operation that used state-of-the-art financial technology networks to launder billions of dollars in ill-gotten profits from online casinos in neighboring countries.

The case exposed how the unholy trinity of illegal online gambling, scam centers and illegal drug trafficking generates billions in profits for international criminal gangs and how countries are manipulated for their own ends.

According to the latest forecasts, the formal online gambling market is expected to grow to over $205 billion by 2030, with the Indo-Pacific region accounting for the majority of the market growth.

In terms of illegal online gambling, authorities in China cracked down on 1,700 online gambling platforms and 1,400 underground banks in 2020 alone, involving more than one trillion yuan ($153 billion) in illegal transactions.

Consequences of Chinese actions

There are several reasons why transnational crime is increasing rapidly in Southeast Asia.

One of these is China’s approach, which has driven crime across its borders, but now crime is spreading to the weakly governed Mekong region, affecting Myanmar, Laos and Cambodia.

A second factor is the huge demand for illegal drugs, particularly methamphetamines, from a wide range of countries, particularly Australia. It is the world’s most popular synthetic drug.

A third factor is widespread corruption throughout Southeast Asia, but especially in the poorer countries of the Mekong region.

This increase in transnational crime in the region is accelerated by the rise of online gambling and transnational criminal activities in the Mekong and neighbouring countries.

These criminal activities pose a risk of destabilization in these countries and have already made their mark in many countries in Southeast Asia and surrounding countries in the Indo-Pacific region.

Underground banking system

Chinese criminal organizations are exploiting online casino infrastructure for an underground digital banking system, fueling the rise of transnational crime in the region.

A clear example of the consequences of Mekong crime is the major money laundering case in Singapore, where more than $2.2 billion in assets were seized from a Chinese criminal group. The gang made huge profits from illegal online gambling and scam centers in Cambodia and the Philippines.

The group laundered the money to Singapore and invested in real estate and companies in Singapore and abroad, such as the United Kingdom.

It is likely that other Chinese criminal gangs involved in online gambling and scams have reinvested their profits in Southeast Asia and the rest of the world.

Scam agencies lure unsuspecting employees through fake job advertisements and force them to work for illegal online casinos and online scams.

A January report from the United Nations Office on Drugs and Crime describes the symbiotic relationship between transnational crime and the rise of online gambling and cryptocurrencies in the region, which use illicit electronic networks such as the dark web and illegal internet service providers.

The role of medicines

It is alleged that the increased global demand for methamphetamine and other illegal drugs has generated huge profits for regional criminal gangs, who then use online casinos and other illegal electronic networks to launder the dirty money.

The Philippines is another hotspot for online gambling and scams and has licensed online casinos classified as Philippine Offshore Gaming Operators. These entities target gamblers from mainland China, as gambling, with the exception of state lotteries, is illegal in China.

The country had attracted a large number of Chinese criminal organizations, who had been forcibly expelled by the Chinese crackdown on organized crime. Moreover, the country was ill-prepared for the wave of crime (e.g. illegal migration, prostitution, money laundering and corruption) that accompanied the rise of online gambling and casinos, even the legal ones.

Many people in the Philippines have called for a ban on these organizations, but the government has hesitated, claiming it would have positive effects on employment and taxes.

However, last week the organization reversed its stance when President Ferdinand Marcos announced a ban on all Philippine offshore gaming operators.

Many of the people working in online gaming companies are mainland Chinese who have stayed in the Philippines illegally.

Corruption problems

Governments in Southeast Asia have been slow to respond to the threat of the rise of transnational crime and online gambling and scam centers.

For the ruling elites in Myanmar, Cambodia and Laos it is the other way around. They protect illegal online casinos and scam centers because of their corrupt involvement.

China is concerned about these developments as many online gambling and scam centers also target its citizens.

There are also concerns about capital flight, a development that allows Chinese citizens to circumvent restrictions on the amount they can transfer abroad (currently $50,000).

Some regional countries are working together to control the online casino menace. China is also working with several Southeast Asian countries to shut down online gambling and scam centers.

It had already called on the Philippines in 2019 to ban online gaming to support China’s own crackdown on cross-border gambling. Beijing has also pushed back against what it called baseless allegations that the Chinese government had ties to online gaming in the Philippines.

It is imperative that countries in Southeast Asia become aware of the seriousness of transnational crime and online gambling and scam centers.

The region has enjoyed great success over the past seven decades in the globalization of electronics and other industries, with rapid growth in employment and income.

This success story will be undone by the rapidly increasing problems of transnational crime in the region unless urgent action is taken before it is too late.

Originally published under Creative Commons- Through 360info™.

Republished from 360Info, August 5, 2024