A report by the United Nations Office on Drugs and Crime (UNODC) has uncovered the dramatic expansion of the cyber-scam industry in Southeast Asia, revealing a complex web of transnational organized crime that's generating tens of billions of dollars in illicit profits annually.

The report, titled "Inflection Point: Global Implications of Scam Centres, Underground Banking and Illicit Online Marketplaces in Southeast Asia," paints a disturbing picture of an industry that has rapidly evolved from scattered fraud operations to sophisticated, large-scale criminal enterprises.  

These syndicates, according to the UNODC, often operate under the guise of legitimate businesses, infiltrating sectors such as industrial and science and technology parks, casinos, and hotels. The industry's growth is fuelled by massive illicit capital inflows, with criminals exploiting gaps in governance and regulations across the region.

This exploitation has led to the proliferation of scam centres, particularly in the Mekong subregion, which has become a breeding ground for these criminal networks.  

The report highlights the syndicates' ability to quickly adapt and adopt new technologies to facilitate their crimes. These include including blockchain, cloud computing, generative artificial intelligence, and machine learning, among others, and sophisticated online platforms that function as illicit online marketplaces.

These platforms provide other criminals with the tools and services necessary for cyber fraud, money laundering, and other illicit activities.

“As a growing number of governments intensify their efforts against cyber-enabled fraud and scam centres in the region, organized crime has responded by hedging both within and beyond it,” the report concludes.

“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, 3 Inflection Point: Global Implications of Scam Centres, Underground Banking and Illicit Online Marketplaces in Southeast Asia with the resulting situation rapidly outpacing the capacity of governments to contain it.

“More than this, the region has emerged as a key testing ground for organized crime, which is reflected in increasing linkages to criminal ecosystems in other parts of the world facing similar vulnerabilities and challenges. "

The problem extends far beyond Southeast Asia, with the report detailing the increasing presence of these crime networks in Africa, the Pacific Islands, South America, and other regions.

In the United States alone, authorities reported more than $US5.6 billion in financial losses to cryptocurrency scams in 2023, with an estimated $US4.4 billion attributed to so-called ‘pig butchering’ schemes most prevalent in Southeast Asia.

This global expansion has allowed the syndicates to target a wider range of victims, increase their illicit profits, and establish a stronger foothold in the international criminal landscape.  

Key Findings of the Report:

• Operational Adaptation and Evolution: Cyber-enabled fraud and scam centres have taken on industrial proportions, driven by billions in illicit capital.  
• Geographic Shifts and Spillover: Crime networks are expanding beyond Southeast Asia, exploiting vulnerabilities in other regions.  
• Emergence of Illicit Online Marketplaces: Platforms like Huione Guarantee (Haowang) have revolutionized transnational organized crime, providing a marketplace for fraud tools and services.   Headquartered in Phnom Penh, Cambodia, the predominantly Chinese language platform has grown to more than 970,000 users and has “become a one-stop-shop for illicit actors sourcing the technology, infrastructure, data, and other resources needed to conduct cyber-enabled fraud and cybercrime, as well as large-scale money laundering and sanctions evasion,” according to the report.
• Integrated Money Laundering Services: These platforms often include integrated cryptocurrency and other financial services, further complicating efforts to track and disrupt illicit financial flows.  

The UNODC report calls for urgent and coordinated international action to address this escalating crisis. It emphasizes the need for increased awareness, improved policies, enhanced capacity building, strengthening regulatory frameworks and stronger cooperation between countries in Southeast Asia and their international partners.

The report warns that failure to take decisive action will have "unprecedented consequences," allowing these crime syndicates to further entrench themselves and expand their operations globally.

The UNODC report is available here.