UN Urges Southeast Asia to Criminalize Unlicensed Money Services and Virtual Asset Providers

Southeast Asian nations are being urged by the United Nations Office on Drugs and Crime (UNODC) to make it illegal to operate a money service firm or virtual asset service provider (VASP) without the required license. The agency voiced concerns in a recent study over the possibility that certain unlicensed VASPs, who have connections to recognized criminal organizations, are serving as middlemen for illicit activities such as fraud and high-risk gambling websites.

One unnamed VASP handled “at least hundreds of millions of dollars” in transactions with criminal organizations, the report revealed. These entities were involved in various illegal activities such as drug trafficking, human trafficking, cybercrime, and child exploitation. Some of these operations were also connected to groups sanctioned by the U.S. Office of Foreign Assets Control (OFAC) and wallets tied to North Korea’s infamous Lazarus Group.

Criminal Ecosystem Requires Urgent Action

Masood Karimipour, the UNODC’s regional representative, emphasized the need for immediate governmental action, stating, “It is more critical than ever for governments to recognize the severity, scale, and reach of this truly global threat, and to prioritize solutions that address the rapidly evolving criminal ecosystem in the region.”

The report also called for more vigilance over organized crime’s involvement in casinos, cyber fraud schemes, and junkets linked to scam operations. Additionally, it recommended better training for law enforcement agencies in detecting online gambling fraud and money laundering methods, especially those using cryptocurrencies.

The survey pointed out that while not all frauds use cryptocurrency, digital currencies are a preferred payment method for thieves. The fact that cryptocurrency transactions are simple, there is a lack of knowledge about how they operate, and there is a lot of misinformation about them, all of which make them appealing to scammers. This is especially true in Southeast Asia, where there is a sizable sector dedicated to internet fraud. Approximately 220,000 people, some of whom were duped into working under false pretenses, are employed in scam centers in Cambodia and Myanmar, according to a recent UN assessment.

Scams such as pig butchering, where fraudsters develop online relationships before convincing victims to invest in fake platforms, are becoming increasingly common. The report also found that scammers are diversifying, using new tactics such as impersonation, asset-recovery scams, and even AI-driven deepfakes to deceive victims.