Risky Convergences

Illegal offshore gaming operators have become entrenched in Southeast Asia. Singapore’s 2024 Money Laundering National Risk Assessment noted that remote or online gambling is more lucrative and transnational in nature than in-person gaming, and is a bigger illicit-finance concern because it services a multitude of players in various countries, who can use a variety of methodologies to move money through online platforms, the industry’s often opaque ownership and control structures, and registration in jurisdictions with lax AML/CFT regulations.

AI Facilitating Entry

With the growing public accessibility of generative artificial intelligence (AI) tools, technology has become a powerful force multiplier for criminal activities such as identity theft, fraud, data privacy violations, and intellectual property breaches, as well as threats to national security, according to UNODC. The increased availability of open-source tools further amplifies the risk, enabling a wider range of illicit activities, including biometric identification fraud and the creation of AI-assisted fraudulent content.

Criminals are no longer required to handle their own money laundering, code malware, or steal sensitive personal information. Instead, these services can be purchased from providers in underground markets and forums, often at very accessible prices. These service providers are enabling the growth of a cyber-enabled criminal industry by helping illicit actors automate phishing attacks, craft convincing fake identities and online profiles, and generate personalized scripts to deceive victims. In addition, AI generated content, and particularly deepfakes, is increasingly being misused by criminal groups in Southeast Asia for impersonation fraud and other cyber-enabled fraud schemes through the alteration of authentic video footage and audio.

• A finance employee at a multinational firm in early 2024 was tricked into paying $25 million to a fraudster using deepfake technology to pose as the company’s chief financial officer. The employee was tricked into attending a video meeting with what he thought were several other staff members, but who were, in fact, deepfake recreations of his coworkers.
• In a 2024 assessment, INTERPOL noted that the increased use of technology is enabling organized crime groups to more effectively target victims. AI and cryptocurrencies coupled with phishing- and ransomware-as-a-service business models have resulted in more sophisticated fraud campaigns without the need for advanced technical skills, according to INTERPOL.

Telegram allows the proliferation of cyber-criminal activities via underground marketplaces on the platform and has become a prime platform for accessing cyber-criminal tools, according to Infosecurity Magazine. These developments have lowered the barriers to entry for criminal networks that previously lacked the technical skills to exploit more sophisticated and profitable methods, according to UNODC.

Public and Private Sector Recommendations

UNODC’s recommendations to help countries and financial institutions strengthen their awareness of the convergence between technology, fraud, and TCOs are informed by dialogues and consultations with regulators and others in the Southeast Asia region. The report recommends:

• Strengthening knowledge and awareness
• Sharing intelligence and threat monitoring focused on cyber-enabled fraud
• Collaborative research

Regulators and law enforcement authorities must monitor the involvement and expansion of organized criminal groups in casinos, junkets, VASPs, and other related sectors.

Financial institutions should monitor guidance released by regulators that’s based on shared intelligence and consultations, as well as adverse media reports about possible involvement of TCOs in transactions that exhibit red flags for fraud and other cyber-enabled crimes.

Cybercrimes generate illicit proceeds that need to be obscured by money laundering. The EU’s 6^th Anti-Money Laundering Directive includes cybercrime in its list of 22 money laundering predicate offenses, that also include human trafficking, drug trafficking, fraud, and others. Illicit actors use social media, fraudulently obtained identity credentials, wire fraud, and online gaming platforms to launder funds.

FinCEN in 2020 released an advisory on cybercrime and cyber-enabled crime that exploited the COVID-19 pandemic. These red flags are also applicable to the illicit finance threats discussed in this article.

🚩 A mismatch between the spelling of names in account information and government-issued identity documents provided at onboarding

🚩 Pictures in identity documentation, especially areas around faces, are blurry or low resolution, or have aberrations or indicate image manipulation, such as incongruences in coloration near the edge of the face, or double edges or lines on delineated facial features

🚩 Images of identity documents exhibit similar irregularities, indicating manipulation—especially around information fields that were likely to have changed to conduct synthetic identity fraud

🚩 A customer refuses to provide supplemental identity documentation or delays producing these documents

🚩 Customer logins occur from a single device or IP address across multiple, seemingly unrelated accounts, often withing a short period of time

🚩 A customer instructs a financial institution to change account communication methods and authentication information, and then quickly attempts to conduct transactions to an account that previously never received payments from the customer

FATF last year released a report on cyber-enabled fraud that included indicators of possible cyber-enabled fraud that included red flags in transaction patterns, customer activity, suspicious customer identity activities, and other red flags that also apply to other money-laundering predicate offenses.

In addition, financial institutions should keep abreast of evolving indicators of cyber activity that may suggest criminal activity by monitoring adverse media reports and use risk-based AML/CFT programs to mitigate these threats. Customer due diligence, transaction monitoring, sanctions and politically exposed persons (PEP) screening can help detect and deter money laundering, whether in the cyber realm or in the physical world.