Criminal syndicates in Asia are harnessing crypto and AI for money laundering and fraud

The United Nations Office on Drugs and Crime (UNODC) has issued a new report documenting how criminal syndicates in Southeast Asia are increasingly deploying digital assets and generative artificial intelligence (AI) to carry out more sophisticated crimes. Across the region, criminals are disguising their illicit activities using crypto, ultimately making it harder to “detect fraud, money laundering, underground banking, and online scams,” the report said.

Last year, the volume of money lost to these organized groups ran up to $37 billion, according to the UNODC.

"Building on existing underground banking infrastructure including underregulated casinos, junkets, and illegal online gambling platforms that have adopted cryptocurrency, the proliferation of high-risk virtual asset service providers (VASPs) across Southeast Asia have now emerged as a new vehicle through which this has taken place, servicing criminal industries without accountability," the report said.

“Organized crime groups are exploiting vulnerabilities, and the evolving situation is outpacing governments’ capacity to contain it,” said Masood Karimipour, UNODC Regional Representative for Southeast Asia and the Pacific.

In the first six months of 2024, there was also a spike in references to deepfakes linked to the criminal syndicates. “The integration of generative artificial intelligence by transnational criminal groups involved in cyber-enabled fraud is a complex and alarming trend observed in Southeast Asia, and one that represents a powerful force multiplier for criminal activities,” said John Wojcik, UNODC Regional Analyst.

Many of these cyber crimes are carried out on T elegram, and rely on stablecoins, or digital assets pegged to stable assets like gold or the U.S. "We move 3 million USDT stolen from overseas per day," said one Chinese ad, according to a UN report.

Stablecoins have emerged as a bedrock layer in cyber crime, and last year accounted for up to 70% of crypto scams around the world, according to the UNODC report. The vast majority of these scams – $19.3 billion worth of crypto crime – feature the Tether stablecoin (USDT), the world’s largest stablecoin.

There’s also been a growing volume of crypto scams recorded on the TRON blockchain network, with almost half ( 45% ) of all illegal cryptocurrency transactions occurring on TRON, while (18%) occurred on Bitcoin and 24% on the Ethereum blockchain network, the report said.

The UNODC recommended the region's policymakers strengthen crypto regulations, and make it a crime for any unlicensed Virtual Asset Service Providers (VASPs) to operate – effectively cracking down on unlicensed crypto exchanges.