AI-Powered Cybercrime Surge in Southeast Asia: UN Report Reveals Alarming Trends

Southeast Asia Groups Using Crypto to Carry Out 'Larger Scale and Harder to Detect' Crimes: UN - Decrypt

Bad actors in Southeast Asia are increasingly leveraging crypto and "producing larger scale and harder to detect fraud, money laundering, underground banking, and online scams," according to a new report released by the United Nations Office on Drugs and Crime (UNODC). UNODC estimates that financial losses from scams targeting victims in East and Southeast Asia range between $18 billion and $37 billion in 2023, with a significant portion attributed to organized crime groups in the region. The report highlights the integration of emerging technologies into criminal activities in the region -- including cryptocurrencies and generative AI. Slava Demchuk, UNODC Consultant and the CEO of crypto compliance firm AMLBot believes that the issue can be addressed. He told Decrypt that "the nature of crypto assets is that it is possible to identify their source, e.g., where they come from, by using blockchain analytics tools." He explained that "such screening steps might indicate that the crypto address is associated with some risks, such as sanctions, illegal services, dark markets, etc." Masood Karimipour, UNODC Regional Representative for Southeast Asia and the Pacific, wrote in the Oct. 7 announcement that "organized crime groups are exploiting vulnerabilities, and the evolving situation is outpacing governments' capacity to contain it." Cybercriminals reportedly leverage underregulated online gambling platforms and unauthorized virtual asset service providers are being used to launder their proceeds, according to the UNODC report. These platforms enable organized crime groups to move funds across borders with minimal oversight, integrating illicit money into the global financial system. The report follows a recent talk by blockchain analytics firm Chainalysis detailing how the rise of Russian-language, non-KYC instant exchange services simplifies money laundering and sanction evasion. The UN report similarly suggests that illegal online casino operators have expanded their activities to include cyber-enabled fraud and crypto-based money laundering services. "Evidence shows organized crime influence within casino compounds, special economic zones, and border areas to conceal illicit activities," the report said. Demchuk highlighted that because not all countries regulate crypto,"this opens the door for those who want to benefit from providing unregulated crypto services." He explained that those firms "attract criminals as they know that there is no KYC process, no crypto screening, and they can easily exchange one crypto for another." The UNODC report also notes a rise in deepfakes made with generative AI by criminal groups in Southeast Asia during the first half of 2024. Criminals are utilizing generative AI to create deepfakes, enhancing their ability to commit fraud and deceive victims. "These developments have expanded the scope and efficiency of cyber-enabled fraud and cybercrime," said John Wojcik, UNODC Regional Analyst. The comments follow a June 2023 United Nations report warning about the role of AI-generated deep fakes in conflict zones. "While holding almost unimaginable potential to address global challenges, there are serious and urgent concerns about the equally powerful potential of recent advances in artificial intelligence," the report read. Organized crime groups are also involved in human trafficking, forcing workers into scam operations. Victims are often misled with false job advertisements and coerced into participating in illegal activities, including cyber fraud and money laundering.

Asian crime gangs are growing fast, thanks to AI

UN report finds Telegram, cryptocurrency are tools of a growing 'criminal service economy' Organized crime syndicates across Asia are using AI, messaging platforms like Telegram, and cryptocurrency to help them expand, with help from dedicated service providers, according to a report the UN Office on Drugs and Crime (UNODC) published on Monday. "Leveraging technological advances, criminal groups are producing larger scale and harder to detect fraud, money laundering, underground banking and online scams," explained Masood Karimipour, UNODC regional representative for Southeast Asia and the Pacific. He pointed out that this shift has led to the emergence of a "criminal service economy," that has helped to make Asia a testing ground for transnational networks eager to expand their reach and diversify their operations. Unfortunately, these criminal enterprises are growing at a speed that's "rapidly outpacing governments' capacity to contain it." Generative AI is a key contributor to the expansion of criminal activity, because it automates tricky tasks like money laundering, coding malware, or gathering breached data. Crims can now buy these services or tools to run them from underground markets, making it easier and cheaper to execute cyber attacks. The technology is also helping to improve attacks that employ social engineering, thanks to audio and video deepfakes, translation apps, and face-swapping software. The report revealed a staggering increase, over 1,500 percent, in deepfake-related crimes in the Asia Pacific from 2022 to 2023, along with a 600 percent rise in deepfake-related advertisements on platforms like Telegram between February and July 2024. "Inflow of capital and expansion of markets has led to increasing professionalization among criminal operations and actors providing services to them," wrote the report's authors. Crime gangs and their service providers have therefore established solid physical and ICT infrastructure to back their online service-based business models. As their operations grow, they require a whole support system: mule bank accounts, cryptocurrency wallets, teams to manage those accounts, and marketplaces - to connect those needing funds moved with those who can facilitate it. Criminals have evolved from small, scattered gangs, into larger and well-organized groups - many operating in compounds staffed with people lured into forced labor. While many of these services are operating in clear violation of the law, others navigate a gray area, making it even harder to tackle the growing problem. The UNODC report described Telegram as a central and necessary conduit for these criminal networks. With sprawling channels and minimal moderation, this environment makes it easy for cyber criminals to operate with little fear of repercussions. The insistence by Telegram that the app is a simple tool and cannot be held responsible for the content or services provided on it leaves room for plausible deniability of illegal activities. However, according to the report, it's clearly evident that many active merchants are explicitly marketing to fraud operators with their wares and services and tailoring them to be more attractive to the criminals. Telegram has begun to see some consequences for enabling illegal activities. The CEO was arrested in France in August, and since then other governments have ordered material be removed from the app - including South Korea in September. How much this will change remains to be seen. Durov has promised to remove some features from the app that have been "abused" by criminals. In late September, he informed users that Telegram would disclose IP addresses and phone numbers of some terror suspects to the relevant authorities. Other important contributors to rising crime are underregulated online gambling platforms and often unauthorized virtual asset service providers (VASPs), both of which help to launder money. The report mentions that 43 percent of scam-related funds this year were funneled into digital wallets that just opened in 2024 - a significant jump from 29.9 percent in 2022. That surge of cryptocurrency use is attributed to the ease with which digi-dollars can be transacted across borders using techniques that law enforcement agencies can't easily track and which make it hard to recover stolen funds. Governments in the region are also grappling with the challenge of regulating over-the-counter (OTC) brokers that use decentralized networks to deal in financial instruments, and peer-to-peer (P2P) platforms. Though both types of org often operate legally, it's particularly common in Southeast Asia for them to be tied to illegal operations. One reason is that the region's OTC brokers are often held to lower know-your-customer requirements than the exchanges on which they operate. Stablecoins are particularly problematic. The study stated that as much as 70 percent of cryptocurrency related scam transactions globally in 2023 used stablecoins. Tether (USDT) on the TRON (TRX) blockchain is the money laundering option of choice, alleged the report. Nearly half of all illicit cryptocurrency transactions took place on the TRON blockchain, accounting for about 45 percent of the total illicit volume, a rise from 41 percent in 2022. Ethereum followed with 24 percent, while Bitcoin made up 18 percent. Among stablecoins, USDT transactions totaled at least $19.3 billion. One interesting trend caused by the use of stablecoins is a shortening of the number of days a scam was active. The shorter time a scam runs, the less chance stablecoin issuers have to blacklist its address. Average scam length dropped from 271 days in 2020 to 42 in the first half of 2024. The scammers pivoted away from elaborate Ponzi schemes with a wide net and towards shorter targeted campaigns - like pig butchering love scams or address poisoning. ®

Southeast Asian criminal groups run amok on Telegram, UN says

Deepfake-related crimes have risen by a staggering 1,530pc between 2022 and 2023 in the Asia-Pacific region. Criminal syndicates in Southeast Asia are using the popular online platform Telegram as a "key venue" to connect and conduct business, a new UN Office on Drugs and Crime (UNODC) report revealed. Organised cybercrime in Southeast Asia is growing faster than it ever has, booming into its own criminal economy, the report published yesterday (7 October) said, adding that criminal groups are sprawling Telegram forums openly conducting illicit activities with little moderation. It also found that the platform has become an important tool for underground cryptocurrency exchanges and online gambling rings. The UNODC report represents the latest accusations levelled against Telegram, whose CEO Pavel Durov was recently arrested by the French government, which accused him of failing to take steps to stop criminal activity on the messaging app. Telegram, however, pushed back, saying that its CEO has "nothing to hide". "It is absurd to claim that a platform or its owner are responsible for abuse of that platform," read a statement from the company. However, the UNODC found thousands of underground marketplaces and channels attributed to Asian organised crime networks in Telegram. It also added that several influential regional criminal networks conduct activities on the platform. Cyber-enabled crime has resulted in significant and concerning losses for its victims - the UNODC estimated that East and Southeast Asian victims suffered a financial loss of between $18bn and $37bn at the hand of cybercriminals just last year. "Organised crime groups are converging and exploiting vulnerabilities, and the evolving situation is rapidly outpacing governments' capacity to contain it," said Masood Karimipour, UNODC regional representative for Southeast Asia and the Pacific. The report also highlighted how criminals are exploiting technological advancements like artificial intelligence and deepfakes, offering criminal "services" including identity theft, biometric identification, data privacy violations and even the creation of AI-assisted sextortion and deepfake pornography. Some criminal vendors are also dedicated to developing malicious software, including fraudulent investment apps, scam kits, data theft, hacking and deepfake software development. The report found that deepfake-related crimes have risen by a staggering 1,530pc between 2022 and 2023 in the region, as well as a significant hike in the number of deepfake keywords mentioned in Telegram forums in Southeast Asia between February and July 2024. Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news.

UN warns massive billion-dollar fraud networks are on the rise in Southeast Asia

Criminals are adopting new technologies to support money laundering models A new report from the United Nations Office on Drugs and Crime has revealed crime syndicates in Southeast Asia are increasingly using technologies such as deepfakes, malware, and generative AI in their operations to trick victims. Analysis of the threat landscape by the UN warned criminals have adapted to technological advances - with an estimated loss of between $18 billion and $37 billion from scams targeting people in East and SouthEast Asia in 2023. This included an over 600% increase in mentions of deepfake related content in the first half of 2024, with the Philippines, Vietnam, and Japan all suffering over 2500% increases between 2022 and 2023. Specifically, the UN report claims criminals have been using AI generated content for social engineering and fraud schemes, alongside 'deceptive recruitment campaigns' - which encourage victims to accept 'jobs' that are fronts for human trafficking schemes. "The integration of generative artificial intelligence by transnational criminal groups involved in cyber-enabled fraud is a complex and alarming trend observed in Southeast Asia, and one that represents a powerful force multiplier for criminal activities," said John Wojcik, UNODC Regional Analyst. "These developments have not only expanded the scope and efficiency of cyber-enabled fraud and cybercrime; they have also lowered the barriers to entry for criminal networks that previously lacked the technical skills to exploit more sophisticated and profitable methods." he said. The spread of AI-enbaled crime is a global issue, with deepfake, ransomware, and cryptocurrency scams all on the rise in recent years. Criminals around the world have been taking advantage of the new ways to exploit vulnerable people, especially using technologies few are trained to spot.

Southeast Asia cyber scammers stole $37B in 2023 as AI-driven crimes...

Southeast Asia has become a hotbed for cyber crime syndicates who have swiped as much as $37 billion last year through romance-investment schemes, crypto fraud, money laundering and illegal gambling, according to a new United Nations report. Cyber criminals in countries like Myanmar, Cambodia and Laos are using malware, generative artificial intelligence and deepfakes at greater rates to carry out the scams, the report by the UN's Office on Drugs and Crime found. "The transnational organized crime threat landscape in Southeast Asia is evolving faster than in any previous point in history," according to the report, first cited by Fortune. Major organized crime groups have increasingly used under-regulated online gambling platforms and virtual asset service providers (VASPs) to move billions of stolen dollars into the financial system. "Organized crime groups are converging and exploiting vulnerabilities, and the evolving situation is rapidly outpacing governments' capacity to contain it," Masood Karimipour, a UNODC regional representative for Southeast Asia, said in a statement. "Leveraging technological advances, criminal groups are producing larger scale and harder to detect fraud, money laundering, underground banking and online scams." Organized crime groups have trafficked hundreds of thousands of people into Southeast Asian countries and forced them to work in hotel and casino scam centers, according to a Bloomberg report. These scam centers have emerged across the globe, as well, according to Kimberly Sutherland, vice president of fraud and identity strategy at LexisNexis Risk Solutions. Tech experts at these scam centers are able to speak multiple languages and can converse with victims in their respective languages, which makes the scam appear more legitimate, Sutherland told The Post. As AI technologies have rapidly expanded, so have AI-driven crimes. Mentions of deepfake-related content across monitored underground marketplaces and cyber crime groups in the region increased 600% in the first half of 2024, the UN report found. During the pandemic, human-initiated cyber attacks plummeted and bot attacks soared, Sutherland said. But human-initiated attacks have rebounded thanks to advanced AI technologies, she said. "We think it is very correlated to AI-driven attacks because AI-driven attacks are making it easier to create a legitimate-looking scam and it's more difficult for businesses and humans to detect," Sutherland told The Post. The low barrier to entry, lack of effective governmental regulations and increased Chinese investments in Southeast Asia's cyber sector have added to the growing problem, Irina Tsukerman, president of security strategy firm Scarab Rising, told The Post. While individuals with low levels of cyber literacy have typically been "easy prey" for scammers and digital natives have been able to identify scams, artificial intelligence has the potential to change this trend by creating more convincing schemes, Tsukerman said. In the workplace, for example, deepfakes and voice cloning can imitate the images and voices of someone's boss, Tsukerman said. These same technologies can mimic the look of government reports or re-create signatures on client projects. "To avoid being taken in by the increasingly street-savvy cybercriminals, corporations and governments should educate the public about these methods and encourage them to identify red flags in training videos and scenarios," Tsukerman told The Post.

UN warns of growing tech threat from Southeast Asia's cyber scam gangs

An ever-expanding array of underground services and the deft uptake of new technologies including artificial intelligence are fueling the continued growth of Southeast Asia's cyber scam gangs and helping them stay a step ahead of law enforcement, the United Nations said in a new report released Monday. The report said most of the estimated $18 billion to $37 billion lost to cyber scam syndicates last year across East and Southeast Asia were stolen by groups based in the countries of the lower Mekong River. The U.N. calls these countries "a key testing ground" for cyberfraud groups with a growing global reach in the victims they scam out of their money and the workers they lure into prison-like compounds as forced labor to run their cons. Last year, the U.N. estimated that more than 200,000 people were forced to work in "scam centers" in Myanmar and Cambodia alone. "This is ground zero for the scamming industry in terms of innovation, in terms of the way that things develop," Benedikt Hofmann, the U.N. Office on Drugs and Crime's deputy representative for Southeast Asia and the Pacific, told VOA ahead of the report's release. The report details the ways in which the syndicates adopt cryptocurrencies and other new technologies to run their scams and integrate them with the region's casinos to move their criminal profits around. "All of this is coming together in basically what is a criminal service economy that's grown around these scam centers and casinos in the Mekong region. And that's really been at the core of the growth in this industry that we've been seeing," Hofmann said. Erin West, a deputy district attorney for Santa Clara County, California, agreed. "Southeast Asia is absolutely the heart of the massive international threat that is coming from scamming worldwide right now," she said. As part of a task force of local law enforcement agencies focused on advanced tech crime, West has become a leading figure in the fight against cyber scammers. The Mekong countries, she told VOA, are "where the organized crime syndicates have deliberately placed their compounds and their casino towers because ... there are places where they know they can conduct this dirty business without much interference from government." Besides merely using cryptocurrencies to hide their money moves, the UNODC says the syndicates have a growing and increasingly sophisticated choice of "high-risk virtual asset service providers" -- essentially cryptocurrency exchanges operating with little to no rules on reviewing, recording or reporting who is using them. Perhaps the largest of the syndicates, the UNODC adds, is Huione Guarantee, an online marketplace run by the Huione Group, a sprawling Cambodian conglomerate with ties to the country's ruling Hun family. Huione Pay, a subsidiary of the group providing a host of currency services, lists Hun To, a cousin of Prime Minister Hun Manet, as a director. Chainalysis, a blockchain analytics firm, recently estimated that Huione Guarantee has processed more than $49 billion in cryptocurrency transactions since 2021. While much of it may be legal, Chainalysis and others have linked millions of dollars worth of transfers to known criminal syndicates including the Lazarus Group, a hacking collective the U.S. says is helping fund North Korea's weapons program. These analytics firms say many of the merchants using Huione Guarantee make thinly veiled offers of services ripe for criminal exploitation, from mule accounts to digital face altering programs and electric shackles for binding "runaway dogs," a reference to scam center workers who try to escape. Huione Group did not immediately reply to VOA's request for comment on the allegations. Another emerging threat is the scammers' uptake of artificial intelligence to help write malware programs or generate increasingly convincing deepfakes for video calls. "It makes things much more complicated for both the law enforcement side but especially the consumer side," Hofmann said. "If you receive a video call from someone who you think might be either some official or family member or someone, that's so many more times more convincing than if you just receive it like a WhatsApp message or some other messenger message out of the blue," he added. West says she also has seen Southeast Asia's scammers using more AI to help them do "exponentially" more with less. "We've seen them using technology to be able to conduct multiple conversations at a time using AI, which limits the need for as many people," she said. "It's scary to realize the access that they have to that kind of technology," she added. "They're consistently way ahead of us in a lot of their craft. They're just very good at it, and things that we used to be able to exploit, we're no longer able to exploit because they've adapted and gotten better, smarter, faster." In Southeast Asia, the UNODC report also describes what it calls a "breakdown" in cooperation among law enforcement agencies across some borders, another weak spot it says the cyberfraud syndicates are exploiting. Despite some successful cases of cross-border cooperation, Hofmann said it remains piecemeal. Colonel Jessada Burinsuchat, superintendent of the Cyber Crime Investigation Bureau of the Royal Thai Police, echoed that view at a forum on cyberfraud in Bangkok last week, organized by the UNODC. "We have cooperation with all the neighboring countries, but it's very little when comparing with Thai police [and] USA, China, Japan or Russia. I can say that around Thailand, maybe we have the very least cooperation. It's not systematic; it's very individual, and it's very ... inconsistent," he said. At the same event, Hofmann called out a particularly "weak link" in Myanmar, where non-state armed groups have for decades controlled autonomous and often crime-riddled enclaves along the country's porous border with Thailand. Many of those groups have only grown stronger since Myanmar's military seized control from the country's elected government in 2021, setting off a civil war that shows no sign of letting up. Given the trends, analysts and experts say the region's cyberfraud epidemic is likely to worsen before it gets better. "It's very clear that an ecosystem has been created that fosters innovation," said Hofmann, making it ever easier for the scammers to work and harder for law enforcement to fight. "Based on that," he added, "you can just see the scale of this continuing to expand going forward."