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A new report by the United Nations Office on Drugs and Crime (UNODC) has exposed the critical role of unlicensed virtual asset service providers (VASPs) in facilitating cybercrime and money laundering in Southeast Asia. The report, which provides a comprehensive analysis of the region's criminal landscape, has prompted calls for stricter regulations and international cooperation to address these growing threats.
Southeast Asia has emerged as a hotspot for cybercrime in recent years, with a surge in online scams, ransomware attacks, and other illicit activities. The region's rapid economic growth and increasing internet penetration have made it an attractive target for cybercriminals.
VASPs facilitate use of cryptocurrency in the illicit economy by processing large volumes of cryptocurrency transactions, including those directly connected to drug trafficking, human trafficking, cybercrime, and online child sexual abuse material. The report emphasizes the role of stablecoins, particularly USDT on TRON, as the preferred method for Asian crime syndicates involved in cyber-enabled fraud and money laundering.
According to the UNODC, many VASPs in the region are operating without proper licenses or oversight, allowing them to be exploited by criminals for illicit activities. These unlicensed VASPs are being used to process transactions for fraud outfits, high-risk gambling sites, and other criminal enterprises.
The report highlights several examples of unlicensed VASPs involved in facilitating cybercrime. One unidentified entity engaged in "at least hundreds of millions of dollars" in transactions with criminal operations, including groups connected to drug trafficking, human trafficking, and child sexual abuse material.
Significant regulatory gaps in the region, particularly regarding awareness, framework robustness, and enforcement capacity, are being exploited by high-risk VASPs. Many of these entities present themselves as legitimate businesses while conducting unauthorized cryptocurrency activities, further complicating enforcement efforts, the report said.
The UNODC has urged Southeast Asian nations to take decisive action to address the problem of unlicensed VASPs. The agency recommends that governments in the region implement stricter regulations for VASPs, including licensing requirements, reporting obligations, and penalties for non-compliance.
In addition to stricter regulations, the UNODC is calling for greater international cooperation to combat the use of VASPs for illicit activities. The agency recommends that governments work together to share information, investigate cross-border crimes, and coordinate enforcement efforts.
