Asian crime gangs are growing rapidly thanks to AI • The Register

Organized crime syndicates across Asia are using AI, messaging platforms such as Telegram and cryptocurrency to help them expand, with the help of dedicated service providers, according to a report published by the UN Office on Drugs and Crime (UNODC) on Monday.

“Taking advantage of technological advances, criminal groups are producing larger-scale and harder-to-detect fraud, money laundering, underground banking and online scams,” said Masood Karimipour, UNODC Regional Representative for Southeast Asia and the Pacific, out.

He pointed out that this shift has led to the rise of a “criminal service economy,” which has helped make Asia a testing ground for transnational networks eager to expand their reach and diversify their operations. Unfortunately, these criminal enterprises are growing at a rate “fast exceeding the ability of governments to contain them.”

AI lowers the barriers to entry

Generative AI is a major contributor to the expansion of criminal activity as it automates difficult tasks such as money laundering, coding malware, or collecting infringing data. Criminals can now purchase these services or tools to exploit them from underground markets, making it easier and cheaper to carry out cyber attacks.

The technology also helps improve attacks using social engineering, thanks to deepfakes of audio and video, translation apps and face-swapping software.

The report revealed a staggering increase of over 1,500 percent in deepfake-related crimes in the Asia Pacific between 2022 and 2023, along with a 600 percent increase in deepfake-related advertising on platforms like Telegram between February and July 2024.

Criminals go into business

“The inflow of capital and the expansion of markets have led to an increasing professionalization of criminal operations and of the actors who provide them with services,” the report’s authors wrote.

Crime gangs and their service providers have therefore established a solid physical and ICT infrastructure to support their online, service-based business models. As their operations grow, they’ll need an entire support system—mule bank accounts, cryptocurrency wallets, teams to manage those accounts, and marketplaces—to connect those who need money with those who can facilitate it.

Criminals have evolved from small, scattered gangs to larger and well-organized groups – many of which operate in complexes housing people who have been lured into forced labor.

While many of these services are clearly operating against the law, others operate in a gray area, making it even more difficult to tackle the growing problem.

Telegram’s role

The UNODC report describes Telegram as a central and necessary channel for these criminal networks. With vast channels and minimal moderation, this environment makes it easy for cybercriminals to operate without fear of repercussions. Telegram’s insistence that the app is a simple tool and cannot be held responsible for the content or services offered on it leaves room for plausible deniability of illegal activities.

However, according to the report, it is clear that many active traders are explicitly marketing their goods and services to scammers and tailoring them to be more attractive to the criminals.

Telegram is starting to see some consequences for enabling illegal activities. The CEO was arrested in France in August and other governments have since ordered the removal of material from the app, including South Korea in September.

To what extent this will change remains to be seen. Durov has promised to remove some features from the app that have been “misused” by criminals. In late September, he informed users that Telegram would release IP addresses and phone numbers of some terror suspects to the relevant authorities.

Crypto does the laundry

Other major factors contributing to rising crime include under-regulated online gambling platforms and often unauthorized virtual asset service providers (VASPs), both of which aid in money laundering.

The report notes that 43 percent of scam-related funds this year were funneled into digital wallets that weren’t opened until 2024 — a significant increase from 29.9 percent in 2022. That increase in cryptocurrency use is attributed to its convenience which allows digi-dollars to be converted into digital wallets. cross-border transactions take place using techniques that law enforcement agencies cannot easily track and that make it difficult to recover stolen money.

Governments in the region are also grappling with the challenge of regulating over-the-counter (OTC) brokers that use decentralized networks to trade financial instruments, and peer-to-peer (P2P) platforms. Although both types of organizations often operate legally, it is especially common in Southeast Asia for them to be involved in illegal activities. One reason is that OTC brokers in the region often have lower know-your-customer requirements than the stock exchanges on which they operate.

Stablecoins are especially problematic. The research shows that as many as 70 percent of cryptocurrency-related scam transactions worldwide in 2023 used stablecoins.

Tether (USDT) on the TRON (TRX) blockchain is the preferred option for money laundering, the report said. Nearly half of all illegal cryptocurrency transactions took place on the TRON blockchain, accounting for approximately 45 percent of total illegal volume, up from 41 percent in 2022. Ethereum followed with 24 percent, while Bitcoin led 18 percent took into account. Among stablecoins, USDT transactions totaled at least $19.3 billion.

An interesting trend caused by the use of stablecoins is a reduction in the number of days a scam was active. The shorter a scam lasts, the less likely stablecoin issuers will blacklist the address.

The average duration of the scam dropped from 271 days in 2020 to 42 in the first half of 2024. The scammers turned away from extensive Ponzi fraud with a wide net and focused on shorter, targeted campaigns – such as pig slaughter, love scam or address poisoning . ®