$40bn Southeast Asian Scam Sector Growing “Like a Cancer”
Cyber-enabled fraud operations are expanding on an industrial scale in Southeast Asia and beyond, the UN has warned.
The findings are revealed in a new report from the UN Office on Drugs and Crime (UNODC), Inflection Point: Global Implications of Scam Centres, Underground Banking and Illicit Online Marketplaces in Southeast Asia.
It claimed that fraud and scam centers are driven by “sophisticated transnational syndicates and interconnected networks of money launderers, human traffickers, data brokers, and a growing number of other specialist service providers and facilitators.”
They tend to congregate in “vulnerable” border areas, particularly in Myanmar and Cambodia, with bigger, more consolidated groups replacing scattered fraud gangs and building “industrial and science and technology parks as well as casinos and hotels.”
Such groups are taking advantage of corrupt officials to expand “deeper into many of the most remote, vulnerable, and underprepared parts of Southeast Asia, and increasingly other regions,” making tens of billions annually in the process, UNODC said.
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“It is now increasingly clear that a potentially irreversible spillover has taken place in Southeast Asia, leaving criminal groups free to pick, choose, and move jurisdictions, operations, and value as needed, with the resulting situation rapidly outpacing the capacity of governments to contain it,” it warned.
Hundreds of thousands of trafficked victims are said to be working alongside “complicit individuals” to support this expansion, with online services an increasingly popular way to make money. These include criminal marketplaces, gambling platforms and software services, unlicensed payment processors and cryptocurrency exchanges, encrypted communications platforms, stablecoins and blockchain networks.
Generative AI (GenAI) is also being used with growing frequency to enhance scam and fraud operations, UNODC said.
In 2023, they made an estimated $37bn in cyber-enabled fraud at home, but these Asian crime groups are also expanding into regions as far-flung as Africa, South America, South Asia and the Pacific islands, the UN added.
The report called for a multi-pronged response, including raised political awareness and will, stronger regulatory frameworks, inter-agency and regional cooperation, and improved technical and operational capacity for law enforcement agencies.
Benedikt Hofmann, UNODC acting regional representative for Southeast Asia and the Pacific, argued that the crime groups were expanding to hedge against future risks and disruptions.
“It spreads like a cancer,” Hofmann added.
“Authorities treat it in one area, but the roots never disappear; they simply migrate. This has resulted in a situation in which the region has essentially become an interconnected ecosystem, driven by sophisticated syndicates freely exploiting vulnerabilities, jeopardizing state sovereignty, and distorting and corrupting policy-making processes and other government systems and institutions.”