Casinos and Crypto Major Drivers of Money Laundering in East and Southeast Asia

Published: 17 January 2024

Casino Roulette

Casinos and cryptocurrencies have become popular tools for criminals to launder billions in ill-gotten gains. (Photo: Uutela, Wikimedia, License)

By Henry Pope

Casinos and cryptocurrencies have taken East and Southeast Asia by storm as a tool for money laundering and underworld banking, according to a new report by the United Nations Office on Drugs and Crime (UNODC).

The report highlights a growing nexus of online unregulated casinos and cryptocurrencies in the region. Together, these tools have allowed criminals to transfer their ill-gotten gains around the world faster than authorities can track or freeze them.

“Casinos and related high-cash-volume businesses have been vehicles for underground banking and money laundering for years, but the explosion of underregulated online gambling platforms and crypto exchanges has changed the game,” said Jeremy Douglas, UNODC Regional Representative for Southeast Asia and the Pacific.

Douglas attributes this explosion to a new age of faster anonymized transactions, unhindered by banking regulations, that have “supercharged the criminal business environment across Southeast Asia.”

For instance, the cryptocurrency Tether Stable Coin (USDT), which is backed by the U.S. dollar, was named by the region’s financial intelligence authorities as among the most utilized by transnational organized crime groups today.

Thanks to its low fees and anonymity guarantees, USDT is a highly liquid crypto option; users made more than US$17 billion in illicit USDT transactions between September 2022 and September 2023, according to an audit cited in the report.

Specifically, the audit found that these transactions were tied to illegal commodity trades, unlawful collection and payment processes, and various other criminal activities.

Tether can also allow criminals to route their money through ‘motorcades,’ a money laundering layering scheme that chains together multiple bank or cryptocurrency exchange accounts. To make matters worse, criminals can advertise these services on widely used social media platforms such as Facebook and Telegram.

The UNODC report links this influx of trading on the underground banking web to the proliferation of cross-border illegal gambling. According to industry estimates, the black market gambling industry generated more than US$145 billion in China alone in 2020.

Cases cited in the report include that of Levo Chan Weng Lian, an alleged triad leader, charged in January 2022 with running dozens of illegal online high stakes gambling venues. Authorities allege that his under-the-table profits totalled well over $4 billion.

Another recent case implicated Crown Resorts, Australia’s largest gambling and entertainment group, for its failure to prevent South Asian transnational organized crime groups from laundering hundreds of billions through its casinos.

In July 2023, Australia’s federal court ruled that the casino operator should pay a AU$450 million (US$300 million) penalty for what amounted to more than 500 breaches of the country’s anti-money laundering laws.