UN Recommends Criminalization of Unauthorized VASPs in Southeast Asia

UN Agency Recommends Criminalization of Unauthorized VASPs to Combat Cyber Fraud in Southeast Asia

1. Introduction
2. recommendations of the United Nations Office on Drugs and Crime (UNODC)
3. diversification of cyber fraud and exploitation of new technologies
4. relationship between criminal networks and crypto assets
5. requests to the government and future actions
6. summary

1. Introduction

On October 8, 2024, the United Nations Office on Drugs and Crime (UNODC) recommended a criminal crackdown on the operation of unauthorized virtual asset service providers (VASPs) as part of its efforts to combat cyber fraud in Southeast Asia. With cyber fraud rapidly evolving and new technologies, including AI, being exploited, concrete measures are needed to address this.

2. recommendations of the United Nations Office on Drugs and Crime (UNODC)

UNODC is calling on Southeast Asian countries to make the operation of unauthorized VASPs subject to criminal penalties; some VASPs are reportedly doing business with fraudulent organizations and high-risk gambling sites, which have led to large-scale criminal activity. In particular, cases involving multimillion-dollar transactions have included organizations involved in drug trafficking, human trafficking, cybercrime, and child abuse, and have been linked to the Lazarus group in North Korea.

3. diversification of cyber fraud and exploitation of new technologies

According to the UNODC report, fraud tactics continue to evolve, with new technologies and AI-based criminal methods on the rise. For example, "piggybacking" romance scams employ methods that approach victims online and direct them to fake investment platforms. Criminals are also changing their tactics with new impersonation scams, job scams, asset recovery scams, and phishing scams.

4. relationship between criminal networks and crypto assets

Crypto assets are a very popular payment method for fraud groups. This is due to the ease of quick cross-border transactions and the lack of understanding of how crypto assets work. Another problem is that in some regions, international law enforcement cooperation has not worked well, making it difficult to recover assets. This has led criminal networks to increase money laundering using crypto assets.

5. requests to the government and future actions

Masood Karimipour, UNODC's regional representative, urged Southeast Asian governments to recognize the seriousness of this global threat and prioritize their efforts to address the rapidly evolving criminal ecosystem. He also stressed the need for increased surveillance of casinos and fraud operations involved in crime, as well as investigations and training of authorities against money laundering using crypto assets.

6. summary

Cyber fraud is a major problem in Southeast Asia and its modus operandi continues to evolve, incorporating new technologies, and UNODC's recommendation is an important step in encouraging governments to crack down on unauthorized VASPs and strengthen measures against international fraud networks. It will be interesting to see how governments respond and address cybercrime in the future.

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