UN Agency Urges Action Against Crypto-Enabled Crimes in Southeast Asia
The United Nations Office on Drugs and Crime (UNODC) has raised serious concerns about the increasing use of cryptocurrency to facilitate illicit activities in Southeast Asia. In a recent report, the agency called for urgent intervention, emphasizing the need for better monitoring, enhanced regulatory oversight, and improved training for law enforcement to combat organized crime involving cryptocurrencies.
Rising Threats from Crypto-Linked Crimes
The report points to a troubling trend: the growing use of cryptocurrencies by criminal enterprises operating within Southeast Asia’s underground banking systems, casinos, junkets, and illegal online gambling platforms. These groups have embraced crypto as a method to carry out fraud, money laundering, and other forms of cybercrime with greater ease and anonymity. The lack of sufficient regulation and the rise of high-risk virtual asset service providers (VASPs) in the region have exacerbated the problem, providing a new avenue for these criminal operations to thrive.
According to the report, while not all scams in the region involve cryptocurrency, it has become a favored method of payment due to the speed and simplicity of cross-border transactions. Criminals use the relative anonymity of cryptocurrency to bypass traditional banking regulations, making it harder for authorities to trace funds.
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UNODC Calls for Stronger Oversight and Law Enforcement Training
To combat these growing threats, the report recommends several key actions, including better regulatory oversight of crypto-related activities and improved monitoring of organized crime within casinos, junkets, and cyber fraud operations. It also emphasizes the importance of equipping law enforcement agencies with the tools and training necessary to detect and dismantle money laundering schemes enabled by cryptocurrencies.
Masood Karimipour, UNODC’s Regional Representative for Southeast Asia and the Pacific, highlighted the growing sophistication of these criminal enterprises, stating,
Leveraging technological advances, criminal groups are producing larger scale and harder to detect fraud, money laundering, underground banking, and online scams. This has led to the creation of a criminal service economy.
Tether (USDT) in the Spotlight for Criminal Use
One cryptocurrency that has drawn significant attention from the UNODC is Tether (USDT), particularly on the TRON blockchain. The report identifies Tether as the preferred stablecoin for transnational criminal networks in East and Southeast Asia, largely due to its efficiency in transferring stolen funds. On-chain analysis reveals that USDT has been linked to numerous high-risk transactions, including those tied to online gambling platforms, cyber fraud schemes, and high-risk exchanges.
Alarmingly, some of these transactions involve wallets associated with entities sanctioned by the U.S. Office of Foreign Assets Control (OFAC), including North Korea’s notorious Lazarus Group, known for cyberattacks and hacking activities. Tether’s association with large-scale criminal operations such as drug and human trafficking, cybercrime, and even the distribution of child sexual abuse material has further cemented its role in illicit finance.
Is Crypto’s Role in Crime Overstated?
Despite the growing concern over the use of cryptocurrencies in illicit activities, some reports suggest that these fears may be exaggerated. For example, a report from Homeland Security Investigations (HSI) noted that regulated cryptocurrency platforms play a crucial role in aiding law enforcement by utilizing the transparency of blockchain technology to track and combat illegal activities.
In fact, according to data from Merkle Science, only a small fraction of USDT transactions—0.61% between July 2021 and June 2024—were flagged as potentially illicit. Similarly, only 0.22% of transactions involving USD Coin (USDC) were flagged during the same period. These findings highlight that, while cryptocurrency is indeed used by criminals, it represents only a tiny portion of the overall financial crime landscape compared to traditional forms of money laundering involving cash.
Further reinforcing this point, a report by Chainalysis revealed that illicit crypto activity accounted for only 0.34% of total on-chain transactions in 2023. This relatively low figure suggests that while cryptocurrencies can be used for illegal purposes, their role in global crime may not be as significant as some critics claim.
As Southeast Asia emerges as a key testing ground for transnational criminal networks, the UNODC’s call for stronger oversight and better law enforcement training is timely. While cryptocurrencies like Tether are being used by criminals for nefarious purposes, the overall percentage of illicit transactions in the crypto space remains small when compared to traditional financial crimes. Nonetheless, the increasing sophistication of criminal enterprises and their use of cryptocurrency to evade detection underscores the need for continued vigilance and regulatory improvements in the region.
