Squeaky-clean Singapore was recently scandalized by a massive money-laundering operation that made use of its ultra-modern financial technology networks to launder billions of dollars of ill-gotten gains from online casinos in neighboring countries.
The case highlighted how the unholy trinity of illegal online gambling, scam centers and illegal drug trafficking are generating billions in profits for international criminal gangs and how countries are being manipulated for their ends.
According to the latest projections, the formal online gambling market is expected to grow to more than $US205 billion by 2030 with the Indo-Pacific region representing the largest share of market growth.
As for illegal online gaming, in China alone, authorities in 2020 cracked down on 1,700 online gambling platforms and 1,400 underground banks involving more than one trillion yuan ($US153 billion) of illegal transactions.
Fallout from China's crackdown
Southeast Asia’s rapid rise in transnational crime is happening for a number of reasons.
One is the crackdown by China that has pushed crime out of its borders only for it to move into the weakly-governed Mekong region affecting Myanmar, Laos and Cambodia.
A second factor is the high demand for illegal drugs, particularly methamphetamines, from a wide range of countries, particularly Australia. It is the world’s most popular synthetic drug.
A third factor is the widespread corruption throughout Southeast Asia but more rampant in the poorer Mekong region countries.
This increase in the region’s transnational crime is being accelerated by the emergence of online gambling and transnational criminal activity in Mekong and neighboring nations.
These criminal operations risk destabilizing these countries and they have already made their presence felt in many Southeast Asian nations and surrounding Indo-Pacific countries.
Underground banking system
Chinese criminal groups are using the infrastructure set up by online casinos for an underground digital banking system and have fueled the rise of transnational crime in the region.
A clear illustration of the consequences of Mekong crime is the major money laundering case in Singapore where more than $US2.2 billion in assets were seized from a Chinese criminal group. The gang made huge profits from illegal online gambling and scam centers in Cambodia and the Philippines.
The group laundered the money to Singapore and invested in property and companies in Singapore and abroad, such as in the United Kingdom.
It is likely that other Chinese criminal groups involved in online gambling and scam centers have reinvested their profits in Southeast Asia and around the world.
Scam centers work by luring unsuspecting workers through false job advertisements and forcing them to work for illegal online casinos and online scams.
A report by the United Nations Office on Drugs and Crime in January outlines the symbiotic relationships between transnational crime and the region’s rise of online gambling and cryptocurrencies which employ illicit electronic networks such as the dark web and illegal internet service providers.
The role of drugs
It argues the increased global demand for methamphetamines and other illegal drugs has generated massive profits for regional criminal groups which then utilize online casinos and other illegal electronic networks to wash the dirty money.
The Philippines is another hotspot for online gambling and scam centers and has classified licensed online casinos as Philippines Offshore Gaming Operators. These entities cater for mainland Chinese gamblers as gambling, except for state-run lotteries, is illegal in China.
The country had attracted numerous Chinese criminal groups forcibly ejected by China’s crackdown on organized crime and it was ill-prepared for the wave of crime (e.g., illegal migration, prostitution, money laundering and corruption) associated with the emergence of online gambling and casinos, even legal ones.
Many in the Philippines have called for these entities to be banned but the government vacillated claiming positive impacts from employment and taxation.
It however reversed its stand last week with President Ferdinand Marcos announcing a ban on all Philippine Offshore Gaming Operators.
Many of the people employed in online gaming operations are mainland Chinese who have managed to stay in the Philippines illegally.
Corruption issues
Southeast Asian governments have been slow to react to the threats of the rise of transnational crime and online gambling and scam centers.
For the ruling elites in Myanmar, Cambodia and Laos, it is the opposite as they protect illegal online casinos and scam center operations because of their corrupt involvement.
China is concerned by these developments since many of the online gambling and scam centers also target its citizens.
It is also worried about capital flight, a development which allows Chinese citizens to bypass restrictions on the amount of money they are able to transfer overseas (currently $US50,000).
Some regional countries are working together to control the online casino menace. China is also cooperating with several Southeast Asian countries to close down online gambling and scam centers.
It had urged the Philippines as far back as 2019 to ban online gaming to support China's own crackdown on cross-border gambling. Beijing also opposes what it said were baseless accusations that the Chinese government was linked to online gaming in the Philippines.
It is vital that Southeast Asian countries wake up to the seriousness of transnational crime and online gambling and scam centers.
The region has had major success with the globalization of its electronics and other industries over the past seventy years with rapid employment and income growth.
This success story will be negated by the rapidly rising transnational crime problems in the region unless prompt action is taken before it is too late.
(The author is an Honorary Research Fellow at the Department of Security Studies and Criminology, Macquarie University, Australia. This article was originally published under Creative Commons by 360info)
