Casinos, Money Laundering,

Underground Banking, and

Transnational Organized Crime
in East and Southeast Asia:
A Hidden and Accelerating Threat

January 2024

Technical Policy Brief

Copyright © 2024, United Nations Office on Drugs and Crime (UNODC).

This publication may not be reproduced in whole or in part and in any form for educational or non-profit
purposes without special permission from the copyright holder, provided acknowledgement of the source
is made. UNODC would appreciate receiving a copy of any publication that uses this publication as a source.

Acknowledgements

Preparation of this report would not have been possible without data, information and intelligence shared
by governments of East and Southeast Asia, international partners, and other organizations. This study was
conducted by the UNODC Regional Office for Southeast Asia and the Pacific (ROSEAP) with the support of
several experts in the field.

Supervision and conceptualization

Jeremy Douglas, Regional Representative, Southeast Asia and the Pacific (Conceptualization and review)

Core team
Inshik Sim, Programme Officer (Coordination, analysis and drafting)
John Wojcik, Associate Programme Officer (Analysis and drafting)
Lili Sang, Programme Officer (Drafting and review)
Seong Jae Shin, Associate Programme Officer (Drafting and review)
David Spence, Associate Programme Officer (Review)
Akara Umapornsakula (Graphic design)

This report has also benefited from the valuable input of many UNODC staff members and external experts
and organisations who reviewed or contributed to various sections of the report including Peter German,
Rebecca Miller, Fabrizio Fioroni, Sylwia Gawronska, Lorenzo Piacientini, Kirbee Tibayan, Woody Tan, and
Vickram Ragunath.

Disclaimer

This report has not been formally edited.

The contents of this publication do not necessarily reflect the views or policies of UNODC, Member States,
or contributory organizations, and neither do they imply any endorsement.

The designations employed and the presentation of the material in this publication do not imply the
expression of any opinion whatsoever on the part of UNODC or the Secretariat of the United Nations
concerning the legal status of any country, territory, city or area or of its authorities, or concerning the
delimitation of its frontiers or boundaries.

Explanatory note

Reference to dollars ($) are to United States dollars, unless otherwise stated. Reference to tons are to
metric tons, unless otherwise stated. Conversions and statistics presented in this report are current as of
the time of printing.
 UNITED NATIONS OFFICE ON DRUGS AND CRIME

Southeast Asia and the Pacific

Casinos, Money Laundering, Underground Banking,

and Transnational Organized Crime
in East and Southeast Asia:
A Hidden and Accelerating Threat

January 2024

Technical Policy Brief

Foreword
Transnational organized crime in Southeast Asia The development of this report has required
has evolved rapidly in recent years. This change analysis of lengthy law enforcement investigations
was first and most profoundly marked by growth and prosecutions which have provided insights
in cross-border trafficking of synthetic drugs and into the methods used by the underground
other commodities, but the landscape has changed. banking industry in Asia. More specifically, it uses
Major transnational organized crime groups have selected excerpts of prior UNODC analysis of
embraced technology and revolutionized the crime criminal indictments, case records and court filings,
environment in the region. intelligence documents, and corporate records, as
well as consultation with both international and
This transformation follows years of progressive regional law enforcement and criminal intelligence
enforcement and regulatory efforts targeting cross- partners.
border cash movement, the casino industry, and
related money laundering, and has been led in part Expanding on UNODC’s past reporting on casinos,
by casino and junket operators who have effectively money laundering, and transnational organized
become bankers for organized crime. At the same crime in Southeast Asia, this technical policy brief
time, many casinos and connected businesses like have been developed in an effort to further improve
junkets have physically relocated into autonomous understanding of the region’s criminal landscape.
areas and Special Economic Zones or SEZs across Failure to address this landscape will have
the region that, in some instances, have become consequences for Southeast Asia and other regions
safe havens and breeding grounds for criminal as organized crime reinvest to further innovate,
networks. professionalize, and consolidate operations.
Importantly, the report provides recommendations
Online casinos and cyberfraud have also recently to improve knowledge, awareness, policy, capacity,
mushroomed across Southeast Asia, particularly and coordination, and should serve as a foundation
in the Mekong since the onset of the COVID-19 for further work and solutions. We also trust it will
pandemic. Alarmingly, organized crime groups prove a useful reference for deeper engagement
running many of these operations have done so between countries in Southeast Asia, UNODC, and
with growing sophistication, through the use of international partners.
data mining and processing, blockchain technology
and, increasingly, generative artificial intelligence.

The acceleration of globalized crime networks

centred in the Mekong aided by technology has
dramatically expanded criminal revenue streams.
This has necessitated a revolution in the regional
underground banking architecture, resulting in the Jeremy Douglas
development of systems and infrastructure capable Regional Representative
of moving and laundering massive volumes of Southeast Asia and the Pacific
state-backed fiat and cryptocurrencies.

While casinos and junkets have for years served

as vehicles for regional underground banking and
money laundering, the proliferation of online
gambling platforms, e-junkets, and both illegal
and underregulated cryptocurrency exchanges in
Southeast Asia has changed the game, allowing for
faster anonymized movement of funds. At the same
time, the creation and success of these systems
has helped expand the region’s broader, booming
illicit economy, in turn attracting new networks,
innovators, and service providers to the criminal
ecosystem of Southeast Asia and the Mekong.
i
Table of Contents

Foreword������������������������������������������������������������������������������������������������������������������������������������������������i
Abbreviations and Acronyms.................................................................................................................v
List of Figures, Tables and Maps............................................................................................................vii
Executive Summary................................................................................................................................1
Report Development and Analysis������������������������������������������������������������������������������������������������������� 11
Regional Overview������������������������������������������������������������������������������������������������������������������������������ 15
Underground Banking and Money Laundering Methods: Case Studies������������������������������������������������� 63
Alvin Chau Cheok-wa (周焯华) and Suncity junket���������������������������������������������������������������������� 65
Taiwan PoC, Money Laundering Networks, and Organized Crime in the Mekong������������������������� 79
Kokang, Special Region 1 of Myanmar����������������������������������������������������������������������������������������� 85
Abbreviations and Acronyms

AMLC Anti-Money Laundering Council (Philippines)

AUSTRAC Australian Transaction Reports and Analysis Centre
BGF Border Guard Force
CEZA Cagayan Economic Zone Authority (Philippines)
DNFBPs Designated Non-Financial Businesses and Professions
DNS Domain Name System
DRG Dragon Coin
FATF Financial Action Task Force
FCLRC First Cagayan Leisure and Resort Corporation
FDI Foreign Direct Investment
FLG Fully Light Group
GCNP General Commissariat of National Police of the Ministry of Interior (Cambodia)
GGRs Gross Gaming Revenues
GTSEZ Golden Triangle Special Economic Zone
ICO Initial Coin Offering
IRCs Integrated Resort Casinos
KNLA Karen National Liberation Army
KNU Karen National Union
KYC Know Your Customer
MERs Mutual Evaluation Reports
MIC Myanmar Investment Commission
MNDAA Myanmar National Democratic Alliance Army
NACD National Authority for Combating Drugs of (Cambodia)
NCA Nationwide Ceasefire Agreement
NFTs Nonfungible Tokens
OFAC Office of Foreign Assets Control
PAGCOR Philippine Amusement and Gaming Corporation
PEZA Philippine Economic Zone Authority
PoC Province of China
POGO Philippine Offshore Gaming Operator
RCBC Rizal Commercial Banking Corporation
RMB Renminbi
SAR Special Administrative Region
SEC Securities and Exchange Commission (Philippines)
SEZ Special Economic Zone
SR Special Region
STRs Suspicious Transaction Reports
TOC Transnational Organized Crime
UNODC United Nations Office on Drugs and Crime
USDT Tether Stable Coin
UWSA United Wa State Army
VASPs Virtual Asset Service Providers

v
vi
List of Figures, Tables and Maps

Figures

Regional Overview

Figure 1. Significant developments in combating cross-border gambling at casinos in Cambodia, Macau

SAR, and the Philippines
Figure 2. Total FDI Inflows into Southeast Asia by country, 2023
Figure 3. Change in licensed junket operators in Macau SAR, 2020-2024
Figure 4. Money laundering vulnerabilities associated with junket operators
Figure 5. Distribution of stolen funds in the Bangladesh bank heist through Philippine casinos and junkets
Figure 6. Volume of STRs related to junkets in the Philippines, 2016-2023
Figure 7. Value of STRs related to junkets in the Philippines, 2016-2023
Figure 8. Simplified informal money transfer model via casino junket offsetting arrangement
Figure 9. Model of simplified junket lifecycle and misuse by organized crime
Figure 10. ‘Vancouver model’ for money laundering through British Columbia’s casinos
Figure 11. Online gambling market size by region 2018-2030 (US $ billion)
Figure 12. Traditional pyramid nature of illegal betting
Figure 13. Pyramid nature of online betting markets in East and Southeast Asia
Figure 14. Simplified running points model for facilitating online gambling and money laundering
Figure 15. Simplified USDT-based running points model for facilitating online gambling and money
laundering
Figure 16. Simplified USDT to fiat ‘motorcade’ model for facilitating money laundering and underground
banking
Figure 17. Hierarchy of offenders in trafficking for forced criminality

Alvin Chau Cheok-wa (周焯华) and Suncity junket

Figure 1. International controller money laundering networks

Tables

Regional Overview

Table 1. Recent enforcement action against online casino operators outside of East and Southeast Asia
Table 2. POGO raids between May – August 2023

Taiwan PoC, Money Laundering Networks, and Organized Crime in the Mekong

Table 1. Major illegal online gambling ring betting volume reported by authorities in Viet Nam, 2019-2022

Maps

Regional Overview

Map 1. Locations of casinos in lower Mekong countries, 2022

Map 2. Locations of land-based casinos in and around Myawaddy, Kayin State, Myanmar, 2023
Map 3. Locations of known or suspected compounds and related special zones in Cambodia, Lao PDR, and
Myanmar, 2023

vii
viii
Executive Summary
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

2
 Executive Summary

Executive Summary

Southeast Asia faces unprecedented challenges and increasingly illegal and underregulated
posed by transnational organized crime and illicit cryptocurrency exchanges have become
economies, and in recent years has become a foundational pieces of the banking architecture
testing ground for new technologies. This was first used by organized crime. Casinos and related
and most observed in the shift to synthetic drug businesses have proven both capable and efficient
production, and particularly methamphetamine, in moving and laundering massive volumes of state-
with the supply expanding to record levels year after backed fiat as well as cryptocurrencies undetected;
year in the Golden Triangle and particularly Shan creating channels for effectively integrating billions
State, Myanmar. However, a less visible, parallel in criminal proceeds into the formal financial
shift was taking place in the regional underground system.
banking1 and money laundering business.
At the same time, the development of scalable and
Fundamentally, the expansion of the illicit economy digitized solutions has supercharged the criminal
has necessitated a revolution in the underground business environment across Southeast Asia,
banking systems of the region. Southeast Asia’s particularly in the Mekong, creating opportunities
booming casino industry, followed by connected for those who have made the region their base
junkets,2 then online casinos, e-junkets, of operations. This has in turn attracted criminal
networks, innovators, and service providers to circle
1 Underpinning transnational organized crime in the region are
sophisticated and increasingly digitized underground banking
around, support, and benefit from the various illicit
systems. Underground banking refers to banking activities that markets in the region while simultaneously driving
run parallel to, and operate outside of, the formal banking the need for underground banking.
system, commonly in the form of informal value transfer. These
informal value transfer systems involve dealers who facilitate the
transfer of value to a third party in another jurisdiction without Concerningly, as law enforcement and regulators
having to physically move the items. In East and Southeast Asia, stepped up their efforts against casinos, illegal
this has increasingly involved the use of unregulated or illegal
casino operations. The final settlement between brokers occurs online gambling, and cyberfraud in Southeast Asia,
through the exchange of cash, cryptocurrency, real estate, trade, organized crime have started migrating operations
or by other means.
2 A junket is an arrangement between a hosting casino and a junket
into inaccessible and autonomous armed group
operator to facilitate gambling by an individual or group of high- territories and other pockets of criminality in and
wealth players for a period of time through VIP programmes or around the Golden Triangle. Ongoing pressure is
tours. Through their relationships with casinos, junket operators
can offer incentives and perks to their VIP club members and
likely to motivate criminal groups to innovate and
other prospective VIP gamblers. Most critically, recent law move further into the shadows.
enforcement action has demonstrated the scale at which some
junket operators have been able to serve as international bank-
like entities, providing a variety of underground financial services This report has been developed through extensive
including credit issuance, currency exchange and multi-currency examination and analysis of criminal indictments,
payment and settlement solutions, remittances, and extra-legal
debt collection mechanisms which have been exploited by
organized crime.

1
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

case records, financial intelligence, court The displacement into, and subsequent growth
filings, and related public disclosure, as well as of, the casino industry in Southeast Asia is
consultation with both international and regional particularly noticeable in the Mekong region,
law enforcement and criminal intelligence partners where environmental factors that are attractive
over more than a year. It represents a unique for casinos and organized crime converge. Among
attempt to understand the mechanics, intricacies, others, this includes the existence of autonomous
and drivers of underground banking in the region. Special Regions (SRs) in Myanmar, characterized by
an absence of government control and rule of law,
Evolution of cross-border gambling and as well as many underregulated SEZs, and remote
displacement into Southeast Asia and porous borders that allow ease of cross-border
movements of people and commodities, rapid
In recent years, the casino industry in Southeast digitization, and large illicit economies.
Asia, and in particular the Mekong, has experienced
exponential growth, totaling 340+ licensed and Proliferation of online casinos and infiltration of
unlicensed land-based casinos by early 2022. This organized crime
follows a series of enforcement and regulatory
developments in the Macau Special Administrative According to latest available projections, the formal
Region (SAR) which were driven, in part, by efforts online gambling market is projected to grow to more
to address on illegal capital outflows, corruption, than US $205 billion by 2030,5 with the Asia Pacific
and money laundering. Between 2019 and 2023, region representing the largest share of market
these measures culminated in the arrests and growth between 2022 to 2026 at a projected 37 per
subsequent convictions of Macau SAR junket cent.6 Concerningly, the rise of the ‘offshore’ online
tycoons, Alvin Chau of Suncity and Levo Chan casino industry (including online sports betting)
of Tak Chun, two of the world’s largest junket in several high-risk jurisdictions in Southeast Asia,
operators. While they were sentenced to 18 years and particularly the Mekong region, has been
and 14 years in prison on hundreds of charges reported as a major and growing challenge faced by
relating to organized crime and illegal betting, the authorities in and beyond the region. Macau SAR
industry is far larger than these two men and their junket operators and their close criminal associates
businesses, and many operators and players have have been key drivers of this trend.
been gradually relocating to areas in and around
loosely regulated Special Economic Zones (SEZs) Unregulated and underregulated online casino
in Southeast Asia.3 This is demonstrated by the platforms run by junket operators, while profitable
sizable decrease in licensed junkets in Macau SAR in and of themselves, also serve as a useful channel
which dropped off from a high of 235 in 2014 to of credit settlement between junkets and their
just 36 in 2023, with approximately 12 currently in clients, and have been observed to be misused
operation.4 extensively to comingle and disguise proceeds
of crime as legitimate online gambling profits.
Prior to this decline, Macau SAR’s biggest junket Most, if not all, of the largest junket operators
operators made enormous profits compared to have established these operations, with smaller
licensed casinos. Because of the historically close junkets and online platforms acting as customer
links between junkets, which served as credit referral agents where further money laundering
providers for customers seeking to evade capital and layering can take place. At the same time,
controls and quotas, and organized crime, which many illegal online casino in Southeast Asia have
have traditionally provided corresponding debt diversified their business lines into cyberfraud
collection services, these profits supported a range operations, with extensive evidence of infiltration
of other criminal enterprises requiring money of organized crime within casinos and SEZs for the
laundering or money transfer services, as well as purposes of concealing various illicit activities.
seemingly legitimate investments. In the mid-
2000s, forward-thinking junket operators began 5 Polaris Market Research, Online Gambling Segment Forecast,
2022 – 2030. Accessed at: https://www.polarismarketresearch.
diversifying into online gambling, expanding the com/industry-analysis/online-gambling-market.
market and increasing revenues and profits. 6 Technavio market research report on online gambling: forecast
and analysis 2022 – 2026. Accessed at: https://www.prnewswire.
com/news-releases/online-gambling-market-size-to-grow-by-
3 Centre for Gaming and Tourism Studies, Macao Polytechnic usd-142-38-billion--37-of-the-growth-will-originate-from-apac--
University, 2023. 17-000-technavio-reports-301539695.html.
4 Ibid.

2
 Executive Summary

Due to limited access to SRs, SEZs, and casino Casino and junket-based underground banking
and cyberfraud compounds, it is not possible to and money laundering
determine the full extent of these operations.
However, recent cases relating to the dismantling of As demonstrated by cases analyzed for this report,
illegal online gambling and cyberfraud operations, casinos and junkets represent a critical piece of
rescues of victims of human trafficking, seizures of the underground banking and money laundering
bulk cash and virtual assets, as well as arrests of infrastructure, serving the needs of transnational
known organized crime figures, demonstrate that organized crime groups operating in the region and
the scale of the industry is massive. globally.
Money laundering is typically understood to occur
Complicating matters further, the integration in three phases:
of technologies including mirror websites,7
cryptocurrency, and third-party betting software • Placement, when funds are integrated into the
or so-called ‘white-label’8 service providers in financial system or into a legal business;
Southeast Asia has meant that it has never been • Layering, which is the process through which
easier to set up an online casino operation with money is distanced from its illegal source – the
limited technical expertise and overhead capital, idea is to make it difficult for investigators to
irrespective of gambling laws within a given follow the money trail; and
jurisdiction. The development and advancement • Integration, when money enters the legal
in internet payment technologies has also assisted economy – after integration, the money
in supporting the online casino market with a rise appears clean and investigators can no longer
in the number of third-party payment providers, tell where it originated from.
e-wallets, and other payment solutions to support
online transactions and in-app purchases. The All three phases of the money laundering process are
massive, growing scale of the industry has also at play in land-based and online casino and junket
drawn in an unprecedented number of young people based methods, offering a dynamic end-to-end
seeking work in the sector, with opportunities for solution that organized crime groups have perfected
some and risks for others linked to recruitment and continue to exploit to move massive volumes
fraud and trafficking for forced criminality. of money without exposure to the formal financial
system. Money laundering and underground money
transfers using casinos, junkets, and increasingly
online gambling platforms, can be conducted using
7 The vast majority of online gambling platforms operating in a variety of methods including cash-in cash-out,9
Southeast Asia exploit what are known as ‘mirror websites’; exact
replicas of primary betting websites housed under different URLs collusion between gamblers,10 junket financing11
which are often algorithmically generated and used to evade
regulatory attention, effectively staying several steps ahead of
authorities by running hundreds of mirror websites on the same 9 Cash-in cash-out: This is the simplest, most typical method of
server to ensure services remain uninterrupted in the event that laundering money at a casino. A criminal simply exchanges
a URL is shut down. their money for playing chips and then converts them back into
8 White-labels have proliferated rapidly in recent years and are cash. This way, dirty money can get mistaken for money won
among the driving forces behind developments in the online at a casino. Some players may even divide money into several
gambling industry. They are similar to franchises, with betting different betting accounts, which will make them appear less
operators being able to outsource every component of the suspicious.
business including sophisticated and secure betting technology, 10 Collusion between players (intentional gambling losses): Under
offshore licensing schemes, website design, customer data and this strategy, proceeds of crime are brought into either physical
management, branding and marketing materials, and operating or online casinos and deliberately lost – in a poker game for
license from third-party service providers. In this model, a white example – in a way that benefits an accomplice who acts as
label may be a specific product or solution (for example a live- another player in the same game. An unfortunate ‘advantage’
dealer casino platform) created with the intention of leasing or of this method is that it allows launderers to dodge any AML
selling it to other businesses or agents, which will then re-brand detection policies that are only triggered by successful bets
it and market as their own. White-label providers may also against the casino itself, not other players.
specialize in facilitating sub-licenses to online gambling operators 11 Junket financing: gambler/client deposits money into junket
in certain jurisdictions in order to enable expansion of business account in one country or stakes other assets, then accesses
operations. For instance, Asian-facing online gambling operators this credit at another jurisdiction to gamble – system of debits
wishing to advertise on the jerseys of sports clubs in the United and credits used to offset wins and losses against the original
Kingdom require a local license to do so. This is commonly amount deposited, allowing the operator to move money/
facilitated through white-label companies based in the offshore value quickly and informally below the radar of tax and law
jurisdictions of the British Virgin Islands or Isle of Man, among enforcement agencies. Junkets may also provide a high interest
others. rate to individuals willing to store their money with the junket to
be used for offsetting.

3
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

and so-called ‘offsetting’ arrangements,12 and jurisdictions involved and the limited extent to
misuse of casino ‘VIP cash’ accounts,13 among which the legislation between these jurisdictions is
others.14 Casinos and junket operators in East and harmonized further complicate investigations while
Southeast Asia and the Pacific have also been found creating large enforcement gaps and grey zones that
to provide so-called ‘safekeeping’ transactions in organized crime capitalized on. As designated non-
which players, including those with clear links to financial businesses and professions15 (DNFBPs), the
organized crime, are permitted to deposit casino sophistication of the compliance regimes instituted
chips for safekeeping with respective casino treasury by online casinos lag far behind those of banks,
divisions and cash-out later. This system has evolved making online casinos attractive targets for criminals
into so-called ‘investment’ arrangements with while enabling what continues to be a ‘heads-down’
major junket operators in which ‘investors’ can earn approach by operators.
between 5 to 7 per cent per month on the funds
deposited with the junket. Rise of ‘points running’ syndicates, ‘motorcades’,
and cryptocurrency
Attractiveness of online gambling for underground
banking and money laundering A key characteristic of online casino operations
are the ever-evolving efforts of operators to hide
Due to the various anonymous payment methods flows of illicit funds from authorities. Together with
available, and the fact that authorities have a very enforcement of capital controls in some countries
limited view of what goes on in an online gambling in East and Southeast Asia, these efforts have
account, it is difficult to verify the source of funds been accelerated by recent COVID-19 pandemic
and whether an online gambling account is used for restrictions on the cross-border movement of
legitimate gambling or underground banking and goods and people. These restrictions limited the
money laundering. The online gambling sector is ability for cash to be smuggled across borders and
also characterized by a non-face-to-face element, into casinos in the region, in turn driving up the
minimal, if any, compliance staff, and huge and need for organized crime to innovate the methods
complex volumes of transactions and financial flows, used to transfer funds.
which are often international in nature. The various
Authorities in the region have reported a growing
12 Offsetting arrangements (also known as mirror transactions):
Similar to traditional Hawala networks; used as a means of number of methods being used by organized
transferring value between jurisdictions via financial credit crime to facilitate the movement of illicit funds
and debit relationship between entities in different countries.
both through and into gambling platforms.
Organizations facilitating offsetting arrange for money debited
from an entity in one jurisdiction to be credited to (sometimes Common modalities include online casinos utilizing
the same) entity in a second jurisdiction, requiring the facilitator underground money laundering and banking
to have fund access in both. Offsetting through the use of casinos
and junkets as well as more traditional trade-based arrangements
has been reported as a method increasingly employed by money
laundering organizations based in the Asia Pacific connected
to drug production and trafficking, arrangement of precursor
chemical shipments, and cybercrime, among other crime types.
13 Misuse of gambling accounts for illegal transactions between
players: In this case, for example, buyers and sellers of illegal
items could use their respective gambling accounts as traditional
bank accounts to make and receive payments. Once the seller’s
gambling account is credited, the money can be cashed out,
claiming it was a successful gamble. It can also be used for hiding
purposes on holding accounts or for wagering at casinos.
14 ‘Dummy’ room transactions: arrangement for international VIP
customers to use a credit or debit card at the resort hotel to 15 DNFBPs represent an attractive channel for money laundering and
authorize a transfer of funds to be made available to the same financial crime, consisting of reporting entities including casinos;
customers casino and/or junket. The hotel issues a room charge real estate agents; dealers in precious metals and precious
bill to the patron, falsely asserting that the hotel had provided stones; lawyers; notaries; other independent legal professionals
services to the person. Patron will pay the bill and be given a and accountants; and trust company service providers. DNFBPs
voucher acknowledging the receipt of funds, escorted to the are acknowledged as a global vulnerability and have historically
casino cage and able to exchange it for cash or chips as part of enjoyed weaker levels of implementation and enforcement of
the transaction. ‘Incidental’ charges: when the patron had not national anti-money laundering measures. This challenge is
stayed at the resort hotel but arrange to pay an incidental charge particularly acute in Southeast Asia and especially the five lower
through their credit or debit card. The money for the incidental Mekong countries of Cambodia, Lao PDR, Myanmar, Thailand,
charge is then made available to the patron. and Viet Nam.

4
 Executive Summary

networks including so-called ‘points running’16 or As third- and fourth-party payments have become
‘score running’ (跑分) syndicates, money mule better understood by authorities and more widely
‘motorcade’17 (車隊) teams, and third- and fourth- reported following ‘Operation Chain Break’20 and
party payment providers, sometimes referred to other measures in China, organized crime groups
as running points platforms and syndicates.18 As have responded by accelerating the integration
of 2020, the Government of China estimated at of cryptocurrencies into their illegal betting
least 5 million participants in this underground operations, creating significant challenges for
industry, totaling an estimated US $157 billion in investigators. In recent years, law enforcement
capital outflows from China, and have attributed and financial intelligence authorities have reported
it to the rise in illegal online gambling and the growing use of sophisticated, high-speed
telecommunications fraud.19 money laundering ‘motorcade’ teams specializing
in underground USDT – fiat currency exchanges
(卡接回U) across East and Southeast Asia. This has
16 Criminals in East and Southeast Asia often use points running also included the mass recruitment of mule bank
syndicates, sometimes referred to as ‘moving ants’, to transfer
stolen money between multiple bank or cryptocurrency exchange accounts across virtually all jurisdictions in the Asia
accounts, as well as online casinos, to obfuscate the source and Pacific region which can be purchased for as little
destination of funds. This informal and often cross-border money as US $30.
transfer modality can involve groups of hundreds and sometimes
thousands of individuals and has grown incredibly popular among
youth due to underemployment in East and Southeast Asia who Due to the rise of cryptocurrency-integrated
will provide their bank account(s) and set up front companies
for use by points running syndicates for the purpose of account
motorcades, points running syndicates, and other
and company pass-through activities (collecting and transferring challenges, in 2021 the Government of China
funds of an unknown origin) in exchange for a commission. banned cryptocurrency transactions, trading, and
These systems are frequently used to collect money for criminal
activities such as traditional predicate offences including drug mining. The industry subsequently migrated to
trafficking as well as cyberfraud and illegal gambling. Running various jurisdictions, particularly driving up already
points has been largely used to facilitate illegal online gambling rising cryptocurrency adoption in several countries
‘and provide another layer of money laundering in which funds
are routed through online gambling platforms and subsequently in Southeast Asia, together with the establishment
‘white-washed’ by cashing in and cashing out through the of high-risk and underground cryptocurrency
platform to justify the source of funds as casino winnings. This
strategy is commonly mixed with transaction miscoding to
exchanges.21 At the same time, it is worth noting that
obfuscate use of the casino platform and depends on third- and cryptocurrency flows connected to organized crime
fourth-party payment providers to help obscure the nature of have been cited as being vastly underestimated by
transactions.
17 This term can be found on many major platforms where criminals industry experts22 as well as law enforcement and
advertise ‘services’ for one another, including Facebook groups regulatory authorities in the region. Experts have
and Telegram groups. Motorcades are an extension of points pointed to a number of shortcomings related to
running syndicates who offer sophisticated layering schemes by
routing money through multiple bank accounts for a percentage existing analyses including massive gaps in crime
of the total laundered and transferred funds. Those individuals attribution on the blockchain, fabricated reporting
at the ‘front of the car’ who bear the most risk of detection
have been seen advertising commission fees of between 20
by crypto exchanges, and the prevalence of wash
to 40 per cent online. UNODC has also observed a common trading23 which inflates crypto transaction volumes,
practice of large motorcade teams working with others when thereby shrinking the portion of illicit transactions
processing very large contracts in order to improve concealment
and effectiveness. According to conversations with authorities identified. This has been echoed by authorities in
in the region, smaller online casinos are used down the money
laundering chain by organized crime groups and illegal betting 20 In response to large-scale underground banking utilizing third-
syndicates to further ‘white-wash’ funds. and fourth-party payment platforms and the casino industry, the
18 Among the most common modalities today appear to be so- Chinese government initiated ‘Operation Chain Break’ in 2019
called fourth-party payments and running points platforms. and has intensified its effort in subsequent years. The country’s
Fourth-party payments are an evolution of third-party payments efforts to try to disrupt the flow of money from mainland China
which, until recently, exploited gaps in transaction reporting in and Macau SAR to countries in Southeast Asia has included an
popular third-party payment apps. While both platforms have August 2020 ‘blacklist’ of casino destinations. For more details
since enhanced reporting of suspected gambling transactions see below box story on the operation.
at the request of Chinese authorities, fourth-party payment 21 UNODC, Internal Threat Assessment on Casinos, Money
providers now typically install an additional intermediary Laundering, and Transnational Organized Crime, 2022.
between bookmaker, bettor, and third-party payment application 22 Association of Certified Anti-Money Laundering Specialists,
in order to circumvent these measures and further obscure the 2023. Accessed at: https://www.moneylaundering.com/news/
nature of transactions. cryptocurrency-research-firms-vastly-underestimate-illicit-
19 Anhui Provincial People’s Government, Press conference for payments-critics-claim/.
crackdown on cross-border gambling operations, April 2021. 23 Wash trading is a form of market manipulation in which an entity
Available at https://www.ah.gov.cn/zmhd/xwfbhx/553972891. simultaneously sells and buys the same financial instruments,
html. creating a false impression of market activity without incurring
market risk or changing the entity’s market position.

5
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

the region who have reported major challenges Convergence between online gambling,
in blockchain investigation capacity alongside cyberfraud, and human trafficking
rapidly growing use of high risk and underground
cryptocurrency exchanges by organized crime.24 In recent years, a growing number of organized
crime groups have diversified extensively into
Money laundering using cryptocurrencies follows criminal cyberfraud operations in several countries
the general pattern of placement-layering- in Southeast Asia. Together with enhanced law
integration but with some specific features: enforcement and regulatory pressures on the
regional online casino industry, criminal groups
• Cryptocurrencies are anonymous at their point were forced to innovate, digitize, and diversify
of creation therefore the placement stage of their business model following the outbreak
the money laundering process is often absent. of COVID-19 to maintain revenue streams for
• It only takes a few seconds to create an account the region’s sprawling casino industry. More
(address) and this is free of cost. specifically, casino operators have moved bases of
• It is possible to create a large money laundering operation deeper into loosely regulated and highly
scheme with thousands of transfers at a low vulnerable jurisdictions including Cambodia, Lao
cost and to execute it using a computer script. PDR, and the Philippines, as well as several border
• Due to rapid increases in exchange rates, with areas controlled by armed groups in Myanmar,
some cryptocurrencies showing very high in turn expanding their business lines to include
growth, it is very easy to justify unexpected cyberfraud among other illicit activities.27 Others
wealth through cryptocurrencies, or have moved operations outside Asia including to
alternatively losses. the United Arab Emirates (UAE), Africa, Eastern
Europe, and the Pacific, and have also attempted
Online gambling platforms, and especially those to legitimize operations by investing into licensed
that are operating illegally, have emerged as among but underregulated offshore gambling companies
the most popular vehicles for cryptocurrency- and other technology-related businesses and other
based money launderers, particularly for those illicit activities.
using Tether or USDT on the TRON25 blockchain,26
while also fueling the intensification of Southeast In doing so, these groups have taken advantage
Asia’s rapidly growing illicit digital economy, and of the region’s casino and SEZ infrastructure
particularly the regional cyberfraud industry. alongside advances in information technology
Using this method, funds are paid into an online and rising youth unemployment. They have
gambling platform or an affiliate agent who may be recruited hundreds of thousands of workers
part of a money laundering network and arranges using the promise of lucrative employment and
the transfer of in-game points online through professionalized recruitment schemes, often using
some combination of identifiable or anonymous social media platforms such as Telegram, WeChat,
accounts. They are either cashed out or placed in TikTok, and Facebook. At the same time, victims of
bets, often in collusion with affiliates. Once the cyberfraud have been targeted using data bought
money in the gambling account is paid out in a and sold on various online data markets and lured
desired currency and jurisdiction, it can effectively to invest into professionally designed fraudulent
be given legal status and integrated into the formal investment platforms.
financial system and economy.
Growing indication of generative AI use, deepfake
24 Meetings with regional law enforcement and financial intelligence
officials, 2023.
fraud, and other malicious technology
25 As of June 2023, TRON had over 165.5 million total user accounts,
more than 5.81 billion total transactions, and over US $11.79 Concerningly, recent advances in large language
billion in total value locked (TVL), hosting the largest circulating
supply of Tether (USDT) globally since April 2021. model-based chatbots, deepfake technology, and
26 USDT on the TRON blockchain has become a preferred choice for automation, have given rise to more sophisticated
crypto money launderers in East and Southeast Asia due to its and damaging cyber fraud schemes, posing a
stability and the ease, anonymity, and low fees of its transactions.
Law enforcement and financial intelligence authorities in major threat to individuals and the formal banking
the region have reported USDT among the most popular industry. By using artificial intelligence (AI) to
cryptocurrencies used by organized crime groups in the region,
particularly those involved in the regional cyberfraud industry, 27 Consultations with regional law enforcement and financial
demonstrated by a surging volume of cases and unauthorized intelligence authorities.
online gambling and cryptocurrency exchange platforms offering
undergroud USDT-based services.
6
 Executive Summary

create computer-generated images and voices Knowledge and awareness

that are virtually indistinguishable from real
ones, scammers can execute social engineering • In-depth analysis is undertaken on online
scams with alarming success rates, exploiting gambling platforms, junkets, cyberfraud,
people’s trust and emotions. Among others, this and the connection to money laundering,
includes sophisticated investment fraud and underground banking, and other forms of
financial grooming including ‘pig butchering’28 and, organized crime, as well as on the infiltration of
increasingly, task scams,29 sextortion, and schemes organized crime in legitimate business sectors,
impersonating law enforcement officers and other in particular real estate, construction, and
government officials. Criminals also exploit stolen travel tour operators.
obtained from various sources including the dark • Collaborative research is done with
web and so-called ‘grey and black market’ Telegram governments in Southeast Asia to understand
groups to profile and identify potential targets, and illicit financial flows within the region, with
use profile photos harvested from social media an emphasis on gatekeepers and facilitators,
platforms to create fake profiles and ‘masks’ that offshore jurisdictions, and methods.
can bypass digital face verification systems and • Monitoring of organized crime involvement in
know-your-customer (KYC) measures, adding casinos, junkets, and cyberfraud operations in
to challenges related to money-muling, money border areas and SEZs is conducted.
laundering, and underground banking. Additionally, • Forums where organized crime are discussed
it is worth noting that authorities in the region have are used to expand awareness of, and build
also reported indication of cyberfraud operations momentum to address, underground banking
based in Southeast Asia rapidly diversifying their and money laundering.
business model by expanding into the development • Advocacy is undertaken to expand public
of malicious mobile and web applications or awareness about the connection of the casino
malware, the broader blockchain gaming industry, industry to organized crime.
online bank fraud schemes, high-risk and und
cryptocurrency exchange and payment services, Legislation and policy
and offering a range of cybercrimes as a service.30
• National action plans and a regional strategy
Recommendations to deal with organized crime, underground
banking, money laundering, and related
The following broad recommendations are criminality, in casinos, junkets, and SEZs, are
intended to help countries in the region address developed.
the findings and vulnerabilities identified in this • Legislation related to money laundering, asset
report, and ultimately to strengthen the awareness, forfeiture, casino supervision and management,
understanding, and capacity of governments, and SEZs, is revised and strengthened.
oversight authorities, and law enforcement in • Mechanisms are established and enforced to
Southeast Asia, and particularly those in the review profiles of investors in casinos, including
Mekong region. Fundamentally, it is important that online platforms and junket operations, and
the region more effectively understand, monitor, SEZs, to determine beneficial ownership and
prevent, and respond to transnational organized associations with organized crime.
crime challenges related to casinos, underground • Legislation related to offshore online casino
banking, and technological innovation. operations fall in line with emerging industry
best practices in moving away from the Point
28 Pig butchering is a type of investment fraud in which criminals of Establishment (‘POE’) model to the Point of
lure victims into digital relationships to build trust before Consumption (‘POC’).
convincing them to invest in cryptocurrency using fraudulent
cryptocurrency platforms.
29 Task scams involve the online recruitment of victims for what Enforcement and regulatory responses
appears to be a remote work scheme. Victims are ordered to
carry out various online tasks including content engagement
(liking social media posts, leaving automated reviews, etc.) • A regional inter-agency forum to share
in exchange for commission, however ‘earning’ more money information and intelligence on the use of
requires layers of ‘investment’ into the tiered operation via
cryptocurrency which is subsequently stolen. casinos for money laundering is created with
30 Consultations with regional law enforcement and financial
intelligence authorities, 2023.

7
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

participation of regulatory bodies, financial

intelligence units, and law enforcement
authorities. Unlicensed and unregulated
casinos, including online platforms, are
identified and prevented from operating.
• Digital forensic evidence is recovered,
preserved, analyzed and shared.
• A mechanism is established with social network
service providers to monitor job recruitment
advertisements.
• Authorities are trained on online gambling
operations and money laundering methods
enabled by sophisticated technologies.
• Filing of suspicious transaction reports (STRs)
is mandatory for casinos and related financial
service providers.
• Regulators improve capacity for land-based and
online casino management and supervision,
particularly in the areas of integrating
suspicious transaction reporting software
and surveillance technologies, and enforcing
anti-money laundering measures including
enhanced beneficial ownership requirements,
and KYC and customer due diligence (CDD)
policies and procedures, particularly in the
case of junket and associated VIP rooms.
• Specialized training on money laundering
investigations and asset forfeiture, is offered to
police, prosecutors, and regulators.
• Funds entering land-based and online casinos
over a prescribed threshold should be verified
as to their origin, and sufficient information
should be provided to allow for cross-checking.
• Licensing regimes for money transfer services
are reviewed and strengthened, making it a
criminal offence for a business to be engaged
in related activity without a license, including
cryptocurrency exchanges.

8
Report Development and
Analysis
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

10
 Report Development and Analysis

Report Development and Analysis

In 2019, UNODC published the ‘Transnational Other partner countries in the region also expressed
Organized Crime in Southeast Asia: Evolution, support and acknowledged that a study exploring
Growth, and Impact’ threat assessment, which the relationship between the casino industry, money
described the characteristics and evolution of laundering, drug trafficking, and transnational
organized crime and the mechanics of different forms organized crime was a necessary first step to assist
of trafficking over a five-year period. The report also countries in the region to better understand the
highlighted several related crimes and important various threats posed by organized crime, and to
vulnerabilities facing the region, including drug facilitate multilateral cooperation and strategies.
and other forms of trafficking and related money
laundering in border areas that have attracted the In what followed, UNODC initiated the development
development of casinos and SEZs. of an internal assessment on casinos, money
laundering, and transnational organized crime in
UNODC presented the findings of the report to Southeast Asia, and a separate internal analysis of
policymakers, relevant law enforcement authorities, illicit financial flows, with a mix of in house analysts
and international partner countries, as well as to and international experts. Ongoing research has
academics and other experts, with the objective involved consultation with extensive networks
of advancing discussions and debate related to of regional public security, law enforcement,
organized crime and supporting the region to and criminal and financial intelligence agencies,
better address related challenges. Following this, providing an in-depth analysis of major threats, risks,
in November 2019 UNODC met with Ministers and red flags associated with the rapid proliferation
and senior officials from six Mekong countries – of casinos and associated money laundering
Cambodia, China, Lao PDR, Myanmar, Thailand, and methods utilized by organized crime in the region.
Viet Nam – under the framework of the Mekong Among the most striking findings, however, was the
MOU on Drug Control, where discussions and ways in which COVID-19 and various enforcement
negotiations on a new political agreement and plan and regulatory pressures had rapidly accelerated the
to address the deteriorating drug situation took rate at which organized crime groups have innovated
place. Using a spin-off policy brief on casinos and and shifted operations online. This was most clearly
money laundering as a basis for discussion during demonstrated by the surge in online gambling and
the meeting, UNODC and the six governments e-junket platforms that fundamentally revolutionized
agreed that a deeper understanding was needed underground banking, money laundering, and the
of the connections between organized crime, drug broader criminal business environment in Southeast
trafficking, money laundering, casinos, and SEZs in Asia.
the region.

11
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

In expanding on this work, UNODC began conducting crime, casinos, money laundering, and underground
a series of bilateral and multilateral meetings with banking in Southeast Asia, and will be used as a basis
law enforcement, criminal and financial intelligence, for discussions and development of responses with
and casino regulatory authorities, to develop authorities in the region.
information on the evolving situation and specifically
online casinos, junkets, and previously identified
organized criminal actors. Due to the sensitive nature
of this work, meetings were mostly conducted in
private settings across the region over more than
a year. UNODC also initiated a comprehensive
review of criminal indictments, case records,
financial intelligence, court filings, and related public
disclosure. This included an analysis of investigation,
indictment, and court decision documents relating
to the convictions of Macau SAR junket bosses, Alvin
Chau of Suncity, and Levo Chan of Tak Chun.

Extensive data and information produced by national

and regional authorities as well as international
organizations was also reviewed alongside a variety
of corporate records related to casinos and junket
operators in the region. This includes information
originating within East and Southeast Asia, Australia,
Canada, Europe, United Kingdom, the United
States, and elsewhere. UNODC has also conducted
an extensive mapping and analysis of thousands of
so-called ‘grey and black business’ Telegram groups
as well as other clear web and dark web platforms,
forums, and marketplaces used for a wide range
of illicit activity relating to underground banking,
money laundering, cyberfraud, drug trafficking, and
human trafficking and migrant smuggling.

This report presents information and data points

that have never been pieced together in an effort to
raise awareness of the scale of the challenge and to
help countries in the region consider how to address
it. Importantly, the report helps set the stage for the
consideration of priorities to improve knowledge,
awareness, policy, coordination, and capacity
in the region, while providing an analysis of key
vulnerabilities, threats, and risks associated with the
rapid proliferation of casinos, cryptocurrency, and
technological innovation. It also contains a series of
recommendations intended to assist governments
and international partners to better deal with the
fast-evolving issues involving casinos and organized
crime in Southeast Asia.

The findings should serve as a foundation for further

information development, and drive solutions-
oriented dialogue about the connection of organized

12
Regional Overview
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

14
 Regional Overview

Regional Overview

Introduction enable organized crime in the region, and why

the proliferation of largely unregulated casinos,
Southeast Asia, and particularly the Mekong region, SEZs, and increasingly high-risk and underground
faces unprecedented challenges posed by organized cryptocurrency exchanges, should be recognized as
crime and illicit economies, which have grown a serious, evolving security concern.
rapidly in recent years. Transnational organized
crime groups in the region are remarkably open, Growing power of organized crime and the scale
appearing in public and presenting themselves of illicit economies in Southeast Asia
as legitimate business entities while making
investments in sectors that can be useful for their Organized crime groups operating in Southeast
illicit businesses. Leaders of these groups have Asia have become increasingly sophisticated and
also proven highly effective in forming alliances agile in recent years, demonstrating the ability to
with influential local figures, with the intent of adapt to, and use, changes in political and business
leveraging these relationships to advance their environments. There was an initial disruption in
criminal activities. the supply of illicit drugs following the onset of
the COVID-19 pandemic, but the market quickly
The most significant of these challenges can rebounded, particularly with the surging supply of
be observed in the case of casinos and Special synthetic drugs in the region.2 Porous borders and
Economic Zones (SEZs)1 which have proliferated the availability of a growing number of precursors
across Southeast Asia to facilitate economic and non-controlled chemicals have been major
development, but have also inadvertently enabled factors, and organized crime demonstrated an
organized crime groups to traffic illicit goods, ability to exploit related vulnerabilities. At the same
operate illegal casinos and recently cyberfraud time, a parallel evolution was taking place within
compounds, and facilitate industrial-scale money the regional underground banking and money
laundering and underground banking. These risks laundering architecture using the casino industry
are of particular concern in the five lower Mekong and innovations in online gaming.
countries which have a long and well-documented
history of organized crime and illicit economies, So-called ‘high-rollers’ increased activity in
in part due to geopolitical circumstances beyond Southeast Asia following the tightening of controls
their control, but also as a result of the social over casino and junket businesses in Macau SAR
and political environment within the region. starting in 2014, but the industry accelerated
The below section examines vulnerabilities that its use of technology in the wake of COVID-19.
Organized crime groups have managed to
1 According to the United Nations Conference on Trade and
Development (UNCTAD), SEZs are defined as geographically
integrate developments in information, financial,
delimited areas within which governments facilitate industrial 2 UNODC, Synthetic Drugs in East and Southeast Asia: Latest
activity through fiscal and regulatory incentives and infrastructure Developments and Challenges 2021.
support.

15
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

and blockchain technology, with thousands and non-licensed casinos in the region, alongside
of sophisticated online casinos and so-called 45 casinos in Macau SAR.4 This number changed
‘e-junkets’ operating alongside high-tech white- following the COVID-19 pandemic and associated
label3 and underground banking service providers mobility restrictions, having a profound impact
in the region. The growing use of cryptocurrency on the casino industry as numbers increased in
and largely unregulated virtual asset service some jurisdictions while dropping off in others.
providers (VASPs) operating in certain parts of the For instance, the number of licensed casinos in
region by actors within these underground systems Cambodia increased from 101 in 2021 to 174 in
have compounded the challenges faced by law 2023 following an all-time high of 193 in 2019,5
enforcement. Complicating matters further, many while the number decreased in Macau SAR to just
of these networks have been found to be deeply 30 by the end of 2022.6
connected to online cyberfraud operations and
trafficking for forced criminality across the region. At the same time, the online casino industry
expanded rapidly as a reaction to these restrictions,
Proceeds of these innovative crimes together with effectively forcing the industry to innovate and
the continued expansion of the synthetic drug accelerate the shift online to reach its client base
trade are generating billions of dollars in revenue remotely while developing new revenue streams.
for organized crime in the region. This, in turn, According to industry experts in the Philippines, for
has necessitated a revolution in underground instance, gross gaming revenue (GGR) from online
banking and money laundering solutions capable operators for 2023 is projected to reach over US
of moving high volumes of state-backed fiat and $438 million, up from US $109.2 million prior to the
cryptocurrencies undetected. COVID-19 pandemic in 2019.7

Criminal and financial intelligence officials A growing number of licensed and unlicensed land-
consulted for the development of this study have based and online casinos and junket operators
shared a similar assessment of the characteristics have also been established in the region in recent
of transnational organized crime operating in the years. Growth in these industries has been driven
Mekong region. At the same time, the traditional by several factors including recent policy changes in
hierarchical structures of Asian crime syndicates parts of East Asia that have caused a displacement,
have adapted, and they now appear to be to increased controls over junkets operating in Macau
enterprises more modern in structure. Collaboration SAR, a loose or altogether non-existent regulatory
and cooperation among a growing number of crime environment in certain parts of Southeast Asia, and
groups, particularly in relation to underground new technologies that have enabled illegal online
banking, money laundering, and online crime has casinos to proliferate.
become the norm. Cases examined in this report
also make it clear that transnational organized crime The displacement and subsequent growth of the
groups in East and Southeast Asia have infiltrated casino industry in Southeast Asia is particularly
licit economies and, concerningly, elements of the noticeable in the Mekong region, where
formal financial system, as a strategy to diversify environmental factors that are attractive for casinos
their business portfolios, launder money, and cover and organized crime converge. These factors
their criminal activities. include the existence of autonomous Special
Regions (SRs) in Myanmar that are characterized by
Overview of casino industries and SEZs in an absence of government control and rule of law,
Southeast Asia large number of SEZs, remote and porous borders
that allow ease of cross-border movements of
In recent years, the casino industry in Southeast people and commodities, rapid digitization, and
Asia, and in particular the Mekong, has experienced illicit economies of scale.
exponential growth. By the beginning of 2022,
UNODC estimated that there were 340+ licensed 4 UNODC, Internal Threat Assessment on Casinos, Money
Laundering, and Transnational Organized Crime, 2022.
3 White-label gambling websites are similar to franchises, with 5 General Secretariat of the Cambodian Gambling Management
betting operators being able to outsource every component of the Commission.
business including sophisticated and secure betting technology, 6 ‘Statista Market Research, 2023. Accessed at: https://www.
offshore licensing schemes, website design, customer data and statista.com/statistics/253763/number-of-casinos-in-macao/.
management, branding and marketing materials, and operating 7 Asia Gaming Brief, 2023. Accessed at: https://agbrief.com/
license from third-party service providers. news/philippines/24/07/2023/pogo-tax-payments-rise-127-
percentyearly-in-2022/.
16
 Regional Overview

As shown in Map 1 below, most casinos in lower are also known to be involved in SEZs as owners,
Mekong countries are located in border towns developers and investors.
neighbouring China and Thailand where most
forms of gambling is illegal and patrons can easily The desire and need for development in areas
travel to visit. At the same time, casinos located on that have historically been considered remote
the eastern and western Cambodian borders and has contributed to the increasing support of
on the coast in Sihanoukville were established to governments in Southeast Asia, and particularly
attract people from neighbouring Thailand, Viet the Mekong, for the establishment of development
Nam, and tourists from mainland China. in border areas using SEZs, including casinos and
so-called ‘smart city’ SEZs. During the March 2018
A unique feature of the casino industry in the 6th Greater Mekong Subregion (GMS) Summit,
region is the large number of unauthorized online several Mekong countries emphasized smart
operators, particularly in Cambodia, Myanmar, cities as part of their new vision for the region’s
the Philippines and, increasingly, Lao PDR.8 Due to next stage of cooperation, particularly targeting
limited access to SRs, SEZs, and casino compounds, the improvement of economic connectivity and
it is not possible for authorities to determine the competitiveness by way of cross-border SEZ
extent of these operations. However, recent cases developments in key economic corridors and border
relating to the dismantling of illegal online gambling cities.10 While exactly what is meant by ‘smart
and cyberfraud9 operations, rescues of victims of city’ remains undefined, several countries have
human trafficking, seizures of bulk cash and virtual already approved or tacitly accepted several of the
assets, as well as arrests of known organized crime region’s first smart city projects to be developed
figures, demonstrate that the scale of the industry despite growing risks posed by organized crime.
is massive and associated challenges and threats They have also started licensing cryptocurrency
are severe. mining operations, exchanges, and other VASPs
which, together with the growing number that
Similar to the region’s casino industry, there has are unlicensed and operating underground, risk
also been a marked increase in the number of SEZs becoming fronts for organized crime groups
established in the Mekong region in recent years. involved in illegal online betting, cyberfraud, money
This expansion has been driven by governments laundering, and underground banking.
seeking to accelerate economic growth, particularly
in key border and coastal areas attractive to foreign Among the best-known examples of infiltration
investors. At the same time, several SEZs are located of organized crime into ‘smart city’ SEZs is that in
in key areas close to drug and precursor production and around Myanmar’s Myawaddy township in
and trafficking in the Mekong region, while high- Karen State, and specifically the Shwe Kokko (also
profile criminals and organized crime syndicates known as Yatai New City), Huanya International
City, Saixigang Industrial Zone, and KK Park
8 While the Philippines have developed a robust regulatory
framework for online casino operators under the Philippine
cyberfraud compounds. Targeting grey and illicit
Offshore Gambling Operator (POGO) licensing scheme, businesses hedging beyond Cambodia following
Philippine authorities have noted severe challenges in regulatory joint Chinese and Cambodian law enforcement
enforcement as well as significant gaps in regulatory frameworks.
For instance, several cases have emerged in recent years of operations beginning in 2017, the companies
licensed POGO operators acting as ‘master license holders’ which involved in these developments share several
subsequently provide ‘sub-licenses’ to other operators, allowing characteristics including clear, documented links
these entities to present themselves as licensed POGOs. In fact,
these entities are commonly licensed as ‘POGO service providers’ to criminal networks or actors engaged in casinos,
which have no authority to operate online casino operations. junkets, cryptocurrencies, and cyberfraud. These
Law enforcement authorities in the Philippines have uncovered
multiple entities using this scheme to have been involved in
particular smart city developments have also
large-scale cyberfraud activities in addition to human trafficking, attracted gambling operations looking to relocate
illegal online gambling, and money laundering. from Macau SAR, the Philippines, and elsewhere in
9 As demonstrated by several cases throughout this report, online
casino compounds in Southeast Asia have diversified their Asia due to a range of law enforcement crackdowns
business lines and are regularly found to include cyberfraud targeting criminality within the casino industry, and
operations. Licensed land-based and online casino operators have evolved to become a haven for organized crime
in the region often serve as a legitimate business front for
organized crime groups engaged in cyberfraud activities. As high and cyberfraud operations (see below section).
cash volume business, casinos are also used to justify the source
of stolen funds. 10 Asian Development Bank, Greater Mekong Subregion: Capacity
Development for Economic Zones in Border Areas, 2018.

17
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Map 1. Locations of casinos in lower Mekong countries, 2022

China

! !
!!!
!!

!
!!
!!!
! !!
!!!! !
Viet Nam
!
!!!!

Myanmar
!!! !!!
!!!
!!!! !

!!!!!
!!! !!
!!
! !
!!!!!
!!!
!! !!
!! !!! !
!!
!

Lao PDR

!! !

!!
!!
!! !!
!
!! !
!!
!
! ! !!
!
!!
!
!!
!! Thailand

!
!

!! !
!
!
!! !
!
!

!
Cambodia
! !!!
!!

!!!
!

! !
! ! ! !
!!!
!
!!!!!! ! !!!
!
!!!!! !
! ! !
!
!

! Casino

Note: Boundaries, names and designations used do not imply official endorsement or acceptance by the United Nations; The number of casinos for
each country is an estimate based on information received from various channels, yet the actual number of casinos in operation might be different,
and a few may have been closed down due to COVID-19. It is also important to note that unlicensed casinos are also included.
Source(s): UNODC elaboration based on information obtained through various channels, including its Country Offices in Southeast Asia and field
researchers.

18
 Regional Overview

Billboard advertisement of Karen State Border Guard Force Commander Chit Thu and She Zhijiang as well as purchase agreement of Shwe Kokko,
Myanmar, signed by Zhijiang under alias, Tang Kriang Kai. Source: Myanmar Investment Committee 2018.

Convergence of organized crime and armed groups Yatai International Holding Group, a company owned
in Myanmar by She Zhijiang, who was also designated under the
U.K. sanctions.13
Located in armed group-controlled territory in Karen
State, Myanmar, an area along the western border Similarly, Wan Kuok Koi, a longtime senior 14K
with Thailand, several so-called ‘smart city’ projects triad member, is also a key investor in and around
including the Shwe Kokko, Huanya International Karen State. Through his Hong Kong SAR-registered
City, Saixigang Industrial Zone, and KK Park, have Dongmei Group, Wan injected millions of dollars
drawn international attention for their housing of into the local casino industry and is believed to be
industrial-scale cyberfraud operations, engaging a key player behind the proliferation of Myawaddy
in human trafficking, and clear links to organized cyberfraud compounds.14 He is also understood to
crime figureheads Wan (Broken Tooth) Kuok Koi and be involved in several related projects in Cambodia
She Zhijiang.11 In 2018, the Myanmar Investment and elsewhere in Southeast Asia and the Pacific. In
Commission (MIC) approved an investment proposal December 2020, Wan was designated by the U.S.
of US $22.5 million in cash for the Shwe Kokko Treasury OFAC as a triad leader and his companies
project in Myawaddy Township, which planned for as engaging in various criminal activities. Myawaddy
the construction of several dozen villas (59 villas) has also attracted the attention of other armed
on about 25.5 acres of land within three years. groups including the United Wa State Army (UWSA)
The developer would be known as Myanmar Yatai, through one of its agricultural conglomerates,
a joint venture between Chit Lin Myaing Company which is said to have opened an office at Shwe
(or Chit Linn Myaing) - a construction and mining Kokko. In addition, the Kokang BGF has heavily
company owned and managed by Colonel Saw Chit invested in the Karen BGF-controlled areas and
Thu, who was sanctioned under U.K. Global Human significant investments in Chit Thu’s enterprises,
Rights Sanctions on December 2023,12 and the Karen including a joint business in Myawaddy that was
Border Guard Force which owns 20 per cent, and launched in 2018 between the business units of the
two BGF militias.15 This includes casino investments
11 She Zhijiang is a Chinese-born naturalized Cambodian citizen
who had been wanted by Chinese authorities for illegal gambling
around Laukkaing in SR 1 and appears to have large-
charges since 2014. He was arrested by Thai authorities in scale underground banking operations linked to
2022 and is known to have a robust business and investment cyberfraud in Myawaddy as well as Sihanoukville,
portfolio across Southeast Asia, and particularly Cambodia,
Myanmar, Thailand, and the Philippines, spanning across Cambodia (see below case study on Kokang SR 1 of
industries including real estate, construction, entertainment, and Myanmar).
blockchain technology technology.
12 Office of Financial Sanctions Implementation HM Treasury, 13 Consultations with regional law enforcement and financial
Global Human Rights Sanctions, Financial Sanctions Notice, intelligence officials, 2023.
December 2023. Accessed at: https://assets.publishing.service. 14 Ibid.
gov.uk/media/6572d548049516000d49be78/Notice_Global_ 15 UNODC, Internal Threat Assessment on Casinos, Money
Human_Rights_081223.pdf Laundering, and Transnational Organized Crime, 2022.
19
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Map 2. Locations of land-based casinos in and around Myawaddy, Kayin State, Myanmar, 2023

!!
!!
! Mae Sot
!
!
!
!
!
!
!
!
!!!! !! Thailand
!
Myawaddy

!
!

Myanmar

!
!

! Casino

Note: Boundaries, names and designations used do not imply official endorsement or acceptance by the United Nations.
Source: UNODC elaboration based on information provided by regional law enforcement and intelligence officials, 2023.

Displacement and evolution of cross-border of someone else. While the new currency policies
gambling began to slow the rapid currency outflows, many
innovative workarounds still exist, often involving
A major driver behind the initial displacement Chinese companies doing business overseas. The
of cross-border gambling out of Macau SAR in methods used to evade currency controls are many
recent years was a stronger emphasis placed by and often highly sophisticated and creative, and
the Government of China on enforcing currency they can be facilitated by underground banks and
transfer quotas and controls.16 Prior to the various exchanges as well as cross-border gambling and
law enforcement actions that followed, it was tourism groups, junket operators and, increasingly,
not uncommon for individuals to transfer large online casinos and e-junket operators.
amounts of currency by pooling quotas of relatives,
friends, and even employees, however China now For this reason, the Government of China has
prohibits anyone from transferring money on behalf formally expressed the view that “cross-border
gambling groups have fundamental characteristics
16 Several countries in Asia restrict the amount of fiat currency
which can leave their jurisdiction and enforce transfer quotas. of organized crime, featuring highly organized
Following an anti-corruption and money laundering campaign structures, and open crime systems with the main
beginning 2014 China set a limit of approximately US $50,000 purpose of procuring economic interests.”17 Chinese
per individual which could be transferred out from the country
to Hong Kong SAR, Macau SAR, Taiwan PoC, or other foreign public security officials have also noted the rising
destinations annually. While this is not new, what has changed in use of cryptocurrencies, the dark web, and other
recent years is a greater emphasis placed by China on enforcing
currency transfer controls. Moreover, prior to 2017, it was not
technologies by organized crime groups, noting
uncommon for individuals to transfer large amounts of currency that the country has experienced growing concern
by pooling quotas of relatives, friends, and even employees. over rampant cross-border and online gambling in
China now prohibits citizens from transferring money on behalf
of other parties.
17 Official communication with the Ministry of Public Security of
China, October 12, 2020.
20
 Regional Overview

Southeast Asia linked to criminal activities including and third- and fourth-party payment providers23
drug trafficking, money laundering, kidnapping, (see below section on the rise of ‘points running’
and unlawful detention.18 syndicates, ‘motorcades’, and cryptocurrency. As of
2020, the Government of China estimated at least
One major challenge in the region relates to 5 million participants in these various underground
underground banking which has become more industries.24
widespread and sophisticated, in part due to
regulations and controls meant to reduce cross- In response, the Chinese government initiated
border gambling. According to industry estimates, ‘Operation Chain Break’ in 2019 and has
cross-border illegal gambling resulted in at least intensified its effort to clamp down on online
US $145 billion of illegal capital outflows from casinos in subsequent years. For instance, in
China alone through offshore gambling websites addition to several operational achievements, the
and casinos in 2020.19 Much of these outflows are government’s efforts to disrupt capital outflows
understood to be facilitated through casino junkets from mainland China and Macau SAR to countries
and sophisticated offsetting arrangements20 as in Southeast Asia has notably included an August
well as offshore online casino websites utilizing 2020 ‘blacklist’ of overseas casino destinations.
other underground money laundering and banking The list also applies to junket operators, private
networks including so-called ‘points running’21 (跑 jet travel operators, and water charters,25 and is
分) syndicates, money mule ‘motorcades’22 (車隊) understood to include travel to various gambling
hubs in Southeast Asia.
18 Ibid.
19 Asian Racing Federation, How China’s Crackdown on Illegal Several high-profile arrests and subsequent
Betting Impacts Global Betting, September 2021.
20 As described in detail in later sections of this report, junket-based convictions have taken place in recent years
offsetting arrangements, also referred to as mirror transactions, following the initial crackdown on illegal gambling,
are ultimately a means of junket financing in which the gambler corruption, and money laundering in China,
deposits money into a junket account or stakes their local assets
in one jurisdiction, and in turn may access this credit minus a offering insights into related underground banking
fee at another. While this model should be limited to gambling, operations controlled by organized crime together
in practice it has become a favoured typology for underground
banking and money laundering as a system of debits and credits
with the evolution of the industry. Among the best
allowing operators to move money quickly and informally below known cases relate to purported triad members,
the radar of tax and law enforcement agencies. In short, offsetting Macau SAR junket bosses, Alvin Chau Cheok-wa
is used as a means of transferring value between jurisdictions
through a junket-gambler credit and debit relationship between (周焯華) and Levo Chan Weng Lian (陈荣炼), who
entities in different countries. Organizations facilitating offsetting ran the Suncity and Tak Chun junkets, respectively
arrange for money debited from an entity in one jurisdiction to be – two of the world’s largest junket tour operators
credited to (sometimes the same) entity in a second jurisdiction,
requiring the facilitator to have fund access in both. (full details described in below case study chapter).
21 Criminals in Southeast Asia often use points running syndicates
to transfer stolen money between multiple bank accounts as
well as online casinos to obfuscate the source and destination of
In July 2020, the Wenzhou Public Security Bureau
funds, regularly using personal accounts to collect and transfer of China initiated an investigation into Alvin
money on behalf of others to earn commissions. These systems Chau, and several associates for establishing and
are frequently used to collect money for illegal and criminal
activities such as telecommunications scams, fraud and illegal managing casino related business operations in
gambling which can also be used to launder money by cashing
in and cashing out through the platform to justify the source of
funds as casino winnings.
22 This keyword can be found on many major platforms where
criminals advertise “services” for one another, including Facebook
groups and Telegram groups. Motorcades are an extension 23 Among the most common modalities today appear to be so-
of points running syndicates who offer sophisticated layering called fourth-party payments and running points platforms.
schemes by routing money through multiple bank accounts for Fourth-party payments are an evolution of third-party payments
a percentage of the total laundered and transferred funds. Those which, until recently, exploited gaps in transaction reporting in
individuals at the ‘front of the car’ bear who bear the most risk popular third-party payment apps. While both platforms have
of detection have been seen advertising commission fees of since enhanced reporting of suspected gambling transactions
between 20 to 40 per cent online. UNODC has also observed at the request of Chinese authorities, fourth-party payment
a common practice of large motorcade teams working with providers now typically install an additional intermediary
others when processing very large contracts in order to improve between bookmaker, bettor and third-party payment application
concealment and effectiveness. According to conversations with in order to circumvent these measures and further obscure the
authorities in the region, smaller online casinos are used down nature of transactions.
the money laundering chain by organized crime groups and 24 Ministry of Public Security of China, 2020.
illegal betting syndicates to further ‘white-wash’ funds. 25 Ibid.

21
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Figure 1. Significant developments in combating cross-border gambling and cyberfraud in Cambodia, China, Lao
PDR, Myanmar, and the Philippines

August 2021
United Wa State Party in Myanmar
SR 2 announces ban on online
gambling following measures to
‘recall’ 40,000 Chinese nationals to
September 2015 August 2019 China from northeastern Myanmar
More than 19,000 Philippine Amusement to combat related
suspects are arrested in a and Gaming Corporation telecommunications fraud.
January - April 2023
2014 three-month cross-border freezes online gambling
Alvin Chau and Levo Chan
Corruption and money anti-triad operation in license applications.
convicted and sentenced to 18 and
laundering crackdown SARs of Hong Kong, January 2020 November 2021 14 years in prison, respectively, on
targeting large Macau and Guangdong 2018 Government of China Arrest of Alvin Chau, charges including unlawful
outbound financial flows province for various illicit Start of crackdown inspections of online CEO of Suncity Group gambling, money laundering, and
from mainland China to activities, including on illegal betting in gaming begin prompting Holdings Ltd, in leading an organized crime group.
Macau begins. gambling. China. exodus. Macau.
2014 2015 2017 2018 2019 2020 2021 2022 2023

October 2017 August 2019 August 2020 February 2022 August - December 2023
Organized crime group The Government of New “blacklist” system for Arrest of Levo Chan, Governments of China, Lao
suspected of gambling-related Cambodia issues cross-border gambling Chairman of Tak Chun PDR, Myanmar, and Thailand
telecommunications fraud directive banning all tourist destinations and Group and CEO of launch joint operation against
targeting mainland China online and arcade related junkets targeting Macau Legend online casinos and cyberscams
arrested in Sihanoukville, gambling operations. high-rollers on the Development in in the Golden Triangle,
Cambodia in a joint police mainland, devised by Macau. resulting in the arrest of
operation between Cambodian China’s Ministry of +40,000 suspects in Kokang
and Chinese authorities. Culture and Tourism in SR1, Wa State SR2 and Mongla
conjunction with the SR4 of Myanmar, as well as
Ministry of Public Security Bokeo, Lao PDR, and their
and other agencies. repatriation to China.

Source: UNODC consolidated timeline based on documents issued by Ministry of Public Security of China, Macau Judicial Police, and related
reports.

China to facilitate cross-border gambling.26 The 2021.30 Data seized by authorities also show that
Wenzhou People’s Procuratorate issued an arrest between 2015 - 2019, Chau and Suncity had
warrant for Alvin Chau on 26 November following processed an estimated +300 billion yuan (US $42
a request from the Bureau,27 and he was arrested billion) bet by online gamblers in China through the
in Macau SAR the next day together with 10 others group’s illegal offshore operations.31 In a related
for using the company’s VIP junket business to case handled in separate proceedings in mainland
recruit Chinese residents to engage in illegal online China, the Wenzhou Intermediate People’s Court
gambling. Police also seized numerous computers, convicted 36 individuals connected to the Chau-
servers, and electronic storage devices as well as led syndicate, finding that the group provided
more than HK $3 million (about US $385,000) in cross-border currency exchange and settlement
cash.28 It was reported that illegal proceeds were services and collected gambling debts through asset
laundered and transferred through the junket management companies and underground banks
accounts of Macau SAR casinos using various illegal it had established on the mainland.32 Between
channels including underground banks.29 With the 2016 and 2021, the Suncity-linked consortium had
arrest of Alvin Chau, the Suncity Group announced expanded to more than 280 mainland Chinese
the termination of its junket operation in Macau shareholder-level agents, more than 38,000
SAR on 10 December 2021. gambling agents/promoters, and more than 80,000
players, totaling at least US $160 million in illegal
Chau was convicted in January 2023 and sentenced cross-border payments and transactions facilitated
to 18 years in prison on over 100 charges relating through Suncity’s regional network of VIP rooms
to operations facilitating illegal bets exceeding and associated online gambling and phone betting
US $105 billion between March 2013 and March platforms operating within offshore casinos in
jurisdictions including Cambodia, the Philippines,
26 Official announcement issued by the Wenzhou People’s and Viet Nam, among others.33 This was further
Procuratorate, 29 November 2021. Available at: https://
w w w. 1 2 3 0 9 . go v. c n / 1 2 3 0 9 /g j / z j / wzs / zd a j x x / 2 0 2 1 1 1 /
substantiated in Chau’s indictment34 and conviction
t20211129_11120587.shtml). decision.35
27 Official announcement issued by the Macau SAR Judiciary Police,
“Eleven persons arrested in the crackdown of a criminalsyndicate 30 Acusação do Ministério Público n.º: 1345/2022. Accessed at:
involving in illegal gambling operation and money laundering”, https://www.court.gov.mo/sentence/zh-9f8cd198757f3527.pdf.
November 2021. Available at https://www.pj.gov.mo/Web// 31 China Central Television, Government of the People’s Republic of
Policia/202111/20211129/12920.html?lang=en). China, January 2024.
28 Ibid. 32 Wenzhou City Public Security Bureau, 26 November 2021.
29 Macau SAR Judiciary Police, Two local men arrested for criminal 33 Ibid.
syndicate, illegal operation of gambling and money laundering, 34 Public Prosecutor’s Office of Macau SAR. Investigation file no.
November 2021. Available at: https://www.pj.gov.mo/Web// 3472/2020, prosecution charge no: 1345/2022.
Policia/202201/20220131/13182.html?lang=en. 35 Acusação do Ministério Público n.º: 1345/2022. https://www.
court.gov.mo/sentence/zh-9f8cd198757f3527.pdf.
22
 Regional Overview

facing operators targeting bettors on the mainland,

in August 2019 the Bank of Cambodia announced
the decision to ban all new online gambling
operations in the country. In the same month,
the Philippine regulator, PAGCOR, announced a
similar decision to freeze all new licenses issued for
Philippine offshore gambling operators (POGOs),
resulting in tens of thousands of foreign industry
workers returning home from both countries.
This outflow was accelerated further by a series
of return notices issued by law enforcement in
China to curtail cross-border gambling in Shan
Arrest of Alvin Chau and related associates, November 2021. Source:
State, Myanmar, particularly in Kokang SR 1, Wa SR
Chinese state-owned media.
2, and Mongla SR 4 where many land-based and
online casinos, unregulated fiat and cryptocurrency
Similarly, in January 2022, Levo Chan Weng Lian,
exchanges, and cyberfraud centres targeting
a purported triad leader and CEO of the Tak Chun
mainland China, Southeast Asia, and other regions,
Group, the second largest junket operator in Macau
are located.
SAR, was charged with operating illegal gambling
businesses for the purpose of money laundering.36
According to latest available data released by
More specifically, Chan was charged for running
the Ministry of Public Security of China, between
offshore proxy and side-betting businesses across
January to November 2023, authorities in the
a total of 39 VIP rooms and gaming venues in East
country successfully resolved 391,000 cases
and Southeast Asia. Macau SAR authorities found
related to telecommunications and network fraud,
that under-the-table bets totaling US $4.46 billion
totaling the arrest of 79,000 suspects including 263
generated profits of HK $1.5 billion for the junket,
‘backbone members or paymasters’ of cyberfraud
facilitated by two local companies established by
groups by task forces dispatched in Cambodia,
Chan named Grupo Levo Lda and Weng Chun. Chan
Indonesia, Lao PDR, the Philippines, Thailand, and
was sentenced to 14 years in prison upon being
Viet Nam.37 This also included the interception
found guilty on all counts including 24 counts of
of 2.75 billion fraud calls and 2.28 billion fraud
illegal gambling in a licensed area, seven counts
messages, the removal of 8.36 million fraud-related
of substantial fraud, one count of illegal gambling
domain names, and 328.8 billion yuan (US $46
and aggravated money laundering. Documents
billion) in funds related to fraud cases.38 In 2022,
found at the time of his arrest also showed Chan
Chinese police also solved more than 37,000 cases
had recently applied to obtain residency in Taiwan
involving cross-border gambling, with operations
PoC, with investigators also reporting he had wired
nationwide cracking down on 2,600 online
a large sum of money to Taiwan PoC in the days
gambling platforms, more than 1,100 casinos, as
leading up to his arrest.
well as in excess of 2,500 illegal payment platforms
and underground banks, 1,200 technical support
Concerningly, both junket operators, among many
teams, and 1,600 platforms promoting illegal
others in the region with documented criminal
gambling.39
association, have expanded across Southeast Asia
in recent years, establishing operations in countries
In August 2023, police in China, Lao PDR, Myanmar,
including Cambodia, Lao PDR, the Philippines, and
and Thailand jointly launched a ‘special regional
Viet Nam, and potentially elsewhere in the region.
campaign’ against organized crime groups involved
in online gambling, telecommunications and
Responses by governments in East and Southeast
Asia 37 Ministry of Public Security of the People’s Republic of China,
2023.
38 Ibid.
Following the surge in criminality together with 39 State Council of the People’s Republic of China,
official requests from China for countries in the 2022. Accessed at: https://english.www.gov.cn/
statecouncil/ministries/202212/29/content_
region to take a tougher stance against Chinese- WS63ad52a3c6d0a757729e4e37.html#:~:text=China%20
36 Macau SAR Criminal Court Case No. CR1-22-0166-PCC. Accessed cracks%20over%2037%2C000%20cross%2Dborder%20
at: Accessed at: https://www.court.gov.mo/sentence/zh- gambling%20cases%20in%202022&text=BEIJING%2C%20
27669220ca401221.pdf. Dec.,in%20a%20statement%20on%20Thursday.

23
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

cyberfraud, and human trafficking, kidnapping, and

illegal confinement.40 Within the following month
authorities reported the arrest of more than 1,350
suspected criminals in Wa State SR 2 and Mongla SR
4 of Myanmar, and Bokeo, Lao PDR.41 By November
2023, the Ministry of Public Security of China had
reported a total of 31,000 suspects transferred
from Myanmar to Chinese custody following the
crackdown on telecommunication fraud originating
from northern Myanmar, totaling 63 alleged
masterminds, organizers, or key members, as well
as 1,531 fugitives.42 More than 1,200 cyberfraud suspects are handed over to Chinese law
enforcement officials in Pu’er, Yunnan province, on Sept 6, 2023.
Beyond responses by governments, another key
development in the SRs of Myanmar took place in
October 2023 under Operation 1027 following the
announcement of the Three Brotherhood Alliance
between the Myanmar National Democratic
Alliance Army (MNDAA), Ta’ang National Liberation
Army (TNLA), and the Arakan Army (AA) armed
groups. In addition to the objective of eradicating
the ‘oppressive military dictatorship’, the offensives
also ostensibly targeted online fraud in Kokang SR 1
along the China – Myanmar border.

In what followed, several cyberfraud centres in

Kokang were forced to relocate operations to safer
territory while the MNDAA also released many
Chinese human trafficking victims back to China. In
December 2023, the Criminal Investigation Bureau
of the Ministry of Public Security of China issued ten
arrest warrants for high-ranking members of the
Kokang BGF leadership on charges relating to their
roles in leading multiple violent criminal groups
engaged in telecommunications and network
fraud against Chinese citizens (more information
available in below case study chapter on Kokang SR Warning advisory issued by the Embassy of the Philippines in Cambodia
1 of Myanmar).43 related to illegal gambling and cyberfraud recruitment, 2023.

As demonstrated by recent law enforcement action

across Southeast Asia, in recent years the situation
has diversified beyond illegal online gambling, with
many land-based casinos and SEZs housing cyberfraud
operations utilizing casino-related businesses for cover.
40 Ministry of Foreign Affairs of China, Press Release, August Together with tens of thousands of rescued victims,
2023. Accessed at: https://www.fmprc.gov.cn/mfa_eng/ this trend has been evidenced by countless warnings
xwfw_665399/s2510_665401/202308/t20230824_11132299.
html. issued by embassies in the region, and particularly
41 Ministry of Public Security of China, 2023. in the Mekong, detailing risks including kidnapping,
42 Ministry of Public Security of the People’s Republic of China, extortion, and human trafficking by criminal groups
Press Release, November 2023. Accessed at: 31,000 Telecom
Scam Suspects Handed over to China by Myanmar (mps.gov.cn) operating within the expanding online casino and
43 Official WeChat of the Criminal Investigation Bureau of the cyberfraud industry.
Ministry of Public Security, December 2023. Accessed at: https://
mp.weixin.qq.com/s/sm3wSWuxPSFcuSg4zlEfsQ.

24
 Regional Overview

Great Wall Park compound where Cambodian authorities reported evidence of human trafficking, kidnapping and torture during September
2022 raids in Sihanoukville, Cambodia.

Demonstrating this concerning development Similarly to the experience of authorities in the

further, in May 2023, Philippine police executed Philippines, in September 2022, Cambodian law
the first of a series of operations against licensed enforcement authorities executed a series of
Philippine offshore gambling operators (POGOs) sweeping raids across multiple suspected illegal
in the Clark Freeport Zone in Pampanga, rescuing online gambling and cyberfraud compounds in
1,090 individuals including 919 foreign nationals Sihanoukville and Phnom Penh, confirming evidence
and 171 Filipinos at the Colorful and Leap Group relating to illegal gambling, money laundering,
Company in the Clark Sun Valley Hub. The syndicate, human trafficking and illegal confinement, torture,
concealing its criminal activities using its POGO and prostitution. According to officials, victims
license, was found to be forcing victims to carry out included many skilled workers with information
cyberfraud and cryptocurrency investment fraud, technology expertise, among others, who had
with authorities citing a wide-scale intelligence been lured into the country through social media
failure that permitted the compound to remain advertisements promising high-paying jobs at
operational for as long as it did. casinos and hotels who were ultimately deceived
and trafficked into heavily guarded compounds
Weeks later in June, police executed another for forced criminality – namely perpetrating
operation at the Hong Tai compound in Las Pinas, cryptocurrency-based romance and investment
Manila, rescuing more than 2,800 reported victims scams. Thousands of victims rescued under the
of forced labour consisting of more than 1,500 operation included nationals of Bangladesh,
Philippine nationals and 1,300 foreign nationals China, India, Lao PDR, Malaysia, Myanmar, Taiwan
from 17 other countries. The raids have intensified PoC, Thailand, Russia, and Viet Nam. Authorities
calls by certain local officials to ban online offshore also seized more than 8,000 mobile phones, 804
gambling operators following a senate inquiry computers, and confiscated numerous passports
in October 2022 to investigate the situation and and weapons.45
allegations of widespread criminality, resulting in a
new licensing scheme being imposed by PAGCOR The sustained measures initially taken to address
to reduce unauthorized sub-licensing and reveal online gambling and cyberfraud operations in
beneficial ownership of online operators (see below Cambodia and the Philippines, as well as countries
section on convergence of casinos, cyberfraud, and including Malaysia, Thailand, and Viet Nam, have
human trafficking). In 2023, the regulator placed caused a partial subsequent displacement into
all existing POGOs on a probationary 1-year license countries including Lao PDR and various parts of
status to provide a grace period to operators for Myanmar. This has been particularly observable
complying with the new licensing scheme. PAGCOR through ongoing developments in Karen State
also sued 33 POGOs, including some who have left and north and south Shan, especially in the
the country, for non-payment of fees amounting to SRs of Myanmar, as well as through the recent
US $39 million.44 establishment of the Laos Offshore Gaming
Authority (LOGA) in August 2022.
44 Philippine Amusement and Gaming Corporation, 2023. Accessed
at: https://www.pagcor.ph/press-releases/pagcor-taking-legal-
action-vs-33-pogos-with-unpaid-fees.php#:~:text=The%20 45 Cambodian National Police, 2022.
Philippine%20Amusement%20and%20Gaming,Chairman%20
and%20CEO%20Alejandro%20Tengco.
25
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

mages of Cambodia- and Myanmar-based hybrid and online casino mobile application and live-dealers, 2022.

The announcement of LOGA,46 which was being pressure in one jurisdiction in the regiona tends to
modelled on the Philippine system currently being displace operations to another.
reformed, is particularly concerning as Lao PDR
possesses very low levels of regulatory enforcement At the same time, the Government of Lao PDR
capacity with respect to addressing the risks posed has stated its intent to attract as many as 750
within its casino sector. This is demonstrated new companies into its SEZs and smart city
by its issuance of zero suspicious transaction projects, particularly within new developments
reports within the sector.47 Yet, the country has of Siphandone SEZ and the revitalized Boten SEZ
proceeded with a pilot project as of 2022 which which is already largely developed.51 Between
saw the licensing of an undisclosed number of 2016-2020, 743 companies invested over US $12
several foreign-owned offshore online operators.48 billion in registered capital into SEZs and included
More than this, the country’s casino sector, which foreign investors from 18 jurisdictions.52, 53 A further
has virtually no functioning regulatory system for US $2.5 billion was invested in 2021.54
casino supervision,49 has shown clear connections
to transnational organized crime groups, evidenced Concerns over control of SEZs in Lao PDR are
most famously by the Kings Romans Casino within pronounced. As mentioned, one of the largest
the Golden Triangle SEZ (see below). The severity and most visible SEZ and casino complexes in
of associated risks of money laundering within the the Mekong region is the Kings Romans casino
casino industry in Lao PDR is also reflected in the complex, which is strategically located inside
latest Mutual Evaluation Report (MER) by the Asia the Golden Triangle SEZ on the east bank of the
Pacific Group (APG) for Money Laundering which Mekong River, in Bokeo, Lao PDR. Located adjacent
designated the sector among the highest-level to the porous border with Myanmar and Thailand,
money laundering risks in the country in 2023.50 Kings Romans also has various connections to the
These developments demonstrate how exerting drug trade in Shan State and other parts of Asia,
46 LOGA is a private company working in cooperation with the 51 Conversations with national law enforcement officials, 2023.
Ministry of Public Security of Lao PDR presently tasked with Sources also indicated that the newly developed high-speed
regulating the emerging online casino industry in the country railway station is based within the Boten SEZ together with the
and providing a range of traditional security and cybersecurity customs check point, posing a significant possible trade security
services. risk should the zone ultimately be operated by the Zhao Wei
47 Asia Pacific Group on Money Laundering. Lao PDR Mutual transnational organized crime network.
Evaluation Report, 2023. Accessed at: https://apgml.org/about- 52 Asia Pacific Group on Money Laundering. Lao PDR Mutual
us/page.aspx?p=91ce25ec-db8a-424c-9018-8bd1f6869162. Evaluation Report, 2023. Accessed at: https://apgml.org/about-
48 Meetings with national casino regulators and financial us/page.aspx?p=91ce25ec-db8a-424c-9018-8bd1f6869162.
intelligence officials, 2023. 53 Investment Promotion Department, All Approved Investment
49 Ibid. Projects by Country (1 January 2016 to 31 December 2020),
50 Asia Pacific Group on Money Laundering. Lao PDR Mutual 12 September 2022. From: https://investlaos.gov.la/resources/
Evaluation Report, 2023. Accessed at: https://apgml.org/about- statistics/.
us/page.aspx?p=91ce25ec-db8a-424c-9018-8bd1f6869162. 54 Ibid.

26
 Regional Overview

and has been identified as a key drug trafficking port, which once developed will handle cargo into
and money laundering hub connected to other the SEZ, and include a hotel and office complexes.
criminally implicated casinos and junkets in the The group is also understood to be in control of a
region.55 Regional law enforcement and financial new airport located approximately five kilometers
intelligence officials have also confirmed the use of to the east of the Golden Triangle SEZ, which is a
affiliate gold traders and money exchange networks joint venture between the Dok Ngiew Kham Group
across the Thailand and Myanmar border area.56 and the Government of Lao PDR. Kings Romans and
the area around it are a key transit hub for drugs
Zhao Wei (赵伟) is the owner of the Dok Ngiew smuggled across the Mekong River into Lao PDR
Kham Group and co-owner of Hong Kong SAR-listed from Shan State. There is also transportation of
Kings Romans International (HK) which operates drugs and other contraband between the ports of
the casino. He was a timber trader before entering Sop Lwe, Ban Mom, and other ports.
the casino business in Macau SAR, and later opened
one of the biggest casinos in Mongla SR 4 before More recently, in December 2023, authorities in
investing in the Golden Triangle SEZ. China and Lao PDR executed a joint operation
targeting confirmed cyberfraud operations, raiding
Zhao Wei’s network of criminal connections in Asia seven business offices and arresting 462 suspects
has been solidified through his close association as in the Golden Triangle SEZ.59 In January 2024, the
a purported member of the 14K triad. In January Government of the Republic of Korea announced
2018, the U.S. Department of the Treasury’s Office a Level 4 travel alert for the Golden Triangle region
of Foreign Assets Control (OFAC) sanctioned Kings of Lao PDR, citing a rise in criminality targeting its
Romans and Zhao Wei, declaring his network a nationals and prohibiting travel into the area.60
‘transnational criminal organization’ and imposing
sanctions on him and three associates as well as
three of his companies based in Lao PDR, Thailand,
and Hong Kong SAR. In addition to drug trafficking,
the U.S. Treasury also alleges that Zhao’s network
engages in human trafficking, wildlife trafficking,
money laundering, and bribery, much of which
is facilitated through Kings Romans.57 In 2015,
following an extensive on-site investigation, the
Environmental Investigation Agency reported that
several Lao SEZs, and particularly Kings Romans, Images released following the joint operation within the Golden
Triangle SEZ. Source: Ministry of Public Security of Lao PDR, December
are a growing hub for illegal wildlife trade including 2023.
tiger skins and body parts, rhino horns and ivory.58
Designated non-financial businesses and
Despite the sanctions, the importance of Kings professions and the evolution of money laundering
Romans as a storage, trafficking, deal-making,
and laundering hub is likely to expand now that DNFBPs represent a highly attractive channel for
Zhao Wei has made his Osiano Trading Sole Co. money laundering and financial crime, consisting
the major investor in a nearby port development of reporting entities including casinos; real estate
project, buying out the shares of other investors agents; dealers in precious metals and precious
in October 2020. Osiano is an affiliate of the stones; lawyers; notaries; other independent legal
Dok Ngiew Kham Group and is reported to have professionals and accountants; and trust company
invested some US $50 million to purchase the service providers (TCSPs).
55 Meetings with regional law enforcement and financial
intelligence officials in East and Southeast Asia, 2023. While DNFBPs are acknowledged as a global
56 Ibid.
57 U.S. Department of the Treasury, Treasury Sanctions the Zhao
vulnerability and have historically enjoyed weaker
Wei Transnational Criminal Organization, Press Releases, 30 levels of implementation and enforcement of
January 2018. Available at: https://home.treasury.gov/news/ national anti-money laundering measures, this
press-releases/sm0272.
58 UNODC threat analysis on casinos, money laundering and 59 Minister of Public Security of Lao PDR, December 2023.
transnational organized crime in Southeast Asia, 2022. 60 Ministry of Foreign Affairs of the Republic of Korea, 2024.

27
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Strong ties between armed groups in Myanmar and the Zhao Wei criminal syndicate

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has designated several
individuals and entities in the Mekong region in connection to drug trafficking and money laundering.
Most notably, sanctions were announced against the UWSA in 2008 and the Zhao Wei criminal network
in 2018.

Recognizing the UWSA as the largest and most powerful drug trafficking organization in Southeast Asia,
the 2008 OFAC measures listed 26 individuals and 17 companies tied to the UWSA and sanctioned
them as Specially Designated Narcotics Traffickers pursuant to the Foreign Narcotics Kingpin Designation
Act (Kingpin Act). The 17 companies were located across several countries in Southeast Asia, including
Myanmar, Thailand, and Singapore, as well as China and Hong Kong SAR. One of these entities was
Shuen Wai Holding, registered in Hong Kong SAR. The exact same address was used for registration of
Kings Romans International in 2009 by alleged 14K triad leader, Zhao Wei, who was sanctioned by OFAC
in 2018 and is known to possess business interests in the Special Regions of Myanmar. The fact that the
two companies were registered at the exact same address is more than a coincidence, and demonstrates
the convergence of armed groups and organized crime in the Mekong region.

Hong Kong Registration records for Shuen Wai Holdings Ltd. (left) and Kings Romans International Co. Ltd. (right)

challenge is particularly acute in Southeast Asia to related reporting entities.62 This has driven
and especially in several lower Mekong countries.61 significant weaknesses in the implementation
Consultations with various governments in the of risk-based anti-money laundering measures
region indicate that their present understanding for DNFBPs in Southeast Asia, including most
is largely limited to obligations addressing money importantly casinos, real estate agents, and dealers
laundering through traditional mechanisms, with in precious metals and stones (DPMS).63
very little effort given to DNFBPs despite the
same anti-money laundering measures applying 62 Reporting entities may differ within each country and may
exclude some DNFBPs. For instance, casinos were not designated
as ‘covered persons/entities’ under the anti-money laundering
61 See respective Financial Action Task Force Mutual Evaluation framework in the Philippines until 2017 following a senate
Reports. inquiry into casinos in 2016 (Blue Ribbon Committee).
63 See respective Financial Action Task Force Mutual Evaluation
Reports.

28
 Regional Overview

This is particularly concerning in the case of Figure 2. Total FDI Inflows into Southeast Asia by
casinos which have been found to be functioning country, 2023   
as banks for organized criminal groups operating
in the region and globally. As documented across a 160
140
growing number of cases in multiple jurisdictions,

FDI inflows (in billon US$)

120
casinos in Southeast Asia have demonstrated 100

extreme and accelerating levels of infiltration 80

of organized crime in the five lower Mekong 60

40
countries and the Philippines, with most countries 20
not possessing a functioning, enforceable casino 0
regulatory management and supervision system.64
Severe gaps have also been observed in transaction
monitoring and reporting software integration and
utilization by casino operators in countries including Source: Statista, 2023.
Cambodia, Lao PDR, and Myanmar. At the same
time, most countries in the region pay virtually no The situation is understood to have been
attention to casino junket operators and other VIP exacerbated by the economic challenges associated
tour companies, which is problematic given that a with the COVID-19 pandemic which have driven
growing number of authorities in East and Southeast countries in the region with high money laundering
Asia have reported widespread misuse of these risk deeper into the development of grossly
businesses for large-scale money laundering and underregulated SEZs and both land-based and
underground banking by transnational organized online casino operations. This particularly includes
crime groups.65 the SRs of northeastern Myanmar which are heavily
rooted in illicit economies and experiencing an
One reason behind the apparent lack of prioritization intensification of technologically advanced casino
of DNFBPs by countries in the Mekong region relates developments and cyberfraud compounds and
to large disparities in foreign direct investment are virtually exempted from any law enforcement
(FDI) and economic development. This, alongside and regulatory frameworks altogether (see below
the rapid growth of the casino industry, has largely case study chapter on Kokang SR 1 of Myanmar).
been the result of policies designed to boost tourism In turn, it is highly likely that DNFBPs in high-
and attract both foreign and local investment risk jurisdictions of the Mekong will increasingly
for economic development. Despite decades of serve as a dangerous loophole and point of least
foreign investment and rapid and sustained growth, resistance in national AML systems, with recent
Southeast Asia continues to be constrained by cases showing clear connectivity between major
economic disparities within the region, which transnational organized crime groups and casino
includes Singapore, a city-state with one of the and junket-based underground banking networks
highest GDPs in the world, and three so-called in the region.
least developed countries, for which foreign aid is
sometimes known to exceed foreign investment. Casino- and junket-based money laundering
The imbalance can be observed in the inward flows
of FDI among countries in Southeast Asia. The establishment of casinos and junkets has surged
across East and Southeast Asia and the Pacific over
The stark difference in the amounts of FDI inflows the past decade, representing a critical piece of
among countries is due to a variety of factors, and the underground banking and money laundering
discussing the causes is not a focus of this report. infrastructure serving transnational organized
However, those countries with smaller FDI inflow crime groups operating in the region and globally.
have been actively seeking opportunities to attract
FDI, including granting licenses to investors for Fundamentally, money laundering occurs in three
casinos. Countries with less strict standards for phases:
vetting FDI are also vulnerable to exploitation by
organized crime seeking to mask illicit proceeds as • Placement, when funds are integrated into the
genuine investments. financial system or into a legal business;
• Layering, which is the process through which
64 Meetings with regional casino regulatory authorities, 2023.
65 Meetings with regional financial intelligence officials, 2023.
money is distanced from its illegal source – the
29
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

idea is to make it difficult for investigators to another player’s winnings, mixing gambling
follow the money trail; and and non-gambling laundering methods, among
• Integration, when money enters the legal others.71 Casinos and junket operators in East and
economy – after integration, the money Southeast Asia and the Pacific have also been found
appears clean and investigators can no longer to provide so-called ‘safekeeping’ transactions
tell where it originated from. in which players, including those with clear links
to organized crime, are permitted to deposit
All three phases of the money laundering process casino chips for safekeeping with respective
are at play in casino- and junket-based methods, casino treasury divisions and cash-out later. This
offering a dynamic end-to-end solution that system has evolved into so-called ‘investment’
organized crime groups have perfected and arrangements with major junket operators in
continue to exploit to move massive volumes of which ‘investors’ can earn between 5 to 7 per
money without exposure to the formal financial cent per month on the funds deposited into the
system. junket, leading authorities including the Philippines
Security Exchange Commission to issue a warning
Money laundering and underground money about the trend in 2019.72
transfers using casinos, junkets, and increasingly
online casinos (see below section) can be conducted Extensive misuse of the junket industry
using a variety of typologies including cash-in
cash-out,66 collusion between gamblers,67 junket Junkets are an extension of casino operators and
financing68 or so-called ‘offsetting’ arrangements,69 represent the driving force behind VIP gambling
misuse of gambling ‘VIP cash’ accounts,70 buying as they connect high-roller gamblers with casinos.
A junket is an arrangement between a hosting
66 Cash-in cash-out: this is the simplest, most typical method of
laundering money at a casino. A criminal simply exchanges
casino and a junket operator to facilitate gambling
their money for playing chips and then converts them back into by an individual or a group of high-wealth players
cash. This way, dirty money can be presented as money won for a period of time through VIP programmes or
at a casino. Some players may even divide money into several
different betting accounts, which will make them appear less tours. Through their relationships with casinos,
suspicious. junket operators can offer incentives and perks to
67 Collusion between players (intentional gambling losses): under their VIP club members and other prospective VIP
this strategy, proceeds of crime are brought into either physical
or online casinos and deliberately lost – in a poker game for gamblers. Most critically, recent law enforcement
example – in a way that benefits an accomplice who acts as action has demonstrated the scale at which some
another player in the same game. An unfortunate ‘advantage’
of this method is that it allows launderers to dodge any AML
junket operators have been able to serve as
detection policies that are only triggered by successful bets international bank-like entities, providing a variety
against the casino itself, not other players. of underground financial services including credit
68 Junket financing: gambler/client deposits money into junket
account in one country or stakes other assets, then accesses this issuance, currency exchange and multi-currency
credit at another jurisdiction to gamble. This system of debits payment and settlement solutions, remittances,
and credits is used to ‘offset’ wins and losses against the original and extra-legal debt collection mechanisms which
amount deposited, allowing the operator to move money/
value quickly and informally below the radar of tax and law have been exploited by organized crime.
enforcement agencies. Junkets may also provide a high interest
rate to individuals willing to store their money with the junket to
be used for offsetting.
In many cases, the partner casino will itself pay some
69 Offsetting arrangements (also known as mirror transactions): or all of the gambler’s travel and accommodation
similar to traditional Hawala networks; used as a means of costs, while the junket operators typically receive a
transferring value between jurisdictions via financial credit
and debit relationship between entities in different countries.
71 For instance, ‘dummy’ room transactions: arrangement for
Organizations facilitating offsetting arrange for money debited
international VIP customers to use a credit or debit card at the
from an entity in one jurisdiction to be credited to (sometimes
resort hotel to authorize a transfer of funds to be made available
the same) entity in a second jurisdiction, requiring the facilitator
to the same customers casino and/or junket. The hotel issues a
to have fund access in both. Offsetting through the use of casinos
room charge bill to the patron, falsely asserting that the hotel
and junkets as well as more traditional trade-based arrangements
had provided services to the person. Patron will pay the bill and
has been reported as a method increasingly employed by money
be given a voucher acknowledging the receipt of funds, escorted
laundering organizations based in the Asia Pacific connected
to the casino cage and able to exchange it for cash or chips as
to drug production and trafficking, arrangement of precursor
part of the transaction. ‘Incidental’ charges: when the patron had
chemical shipments, and cybercrime, among other crime types.
not stayed at the resort hotel but arrange to pay an incidental
70 Misuse of gambling accounts for illegal transactions between
charge through their credit or debit card. The money for the
players: in this case, for example, buyers and sellers of illegal
incidental charge is then made available to the patron.
items could use their respective gambling accounts as traditional
72 Meetings with regional law enforcement and financial
bank accounts to make and receive payments. Once the seller’s
intelligence officials in East and Southeast Asia, 2023.
gambling account is credited, the money can be cashed out,
claiming it was a successful gamble. It can also be used for hiding
purposes on holding accounts or for wagering at casinos.
30
 Regional Overview

Sam Gor (三哥) or ‘The Company’ and casinos

Sam Gor, also known as ‘The Company’, is a multi-

billion-dollar transnational organized crime syndicate
that has had a dominant role in the Asia Pacific
drug trade. Money laundering has been essential
for Sam Gor, although there is limited official public
information disseminated about the methods used by
the group. However, the New South Wales Report of
the Inquiry under section 143 of the Casino Control Act
1992 (NSW), which recently examined Crown Casino,
found that Roy Moo, who was imprisoned in 2013,
laundered the illicit proceeds of the Sam Gor syndicate
through Crown Casino Melbourne. The same report
also concluded that a leading member of the Sam Gor
Syndicate was a suspected business partner of the Hot
Pot Junket until 2015 at Crown Casino Melbourne and
was also involved in money laundering.

Hong Kong court bankruptcy proceedings No.7123 re: 9

Several other documented cases of Sam Gor activity February 2018.
also indicate their known associates using casinos in
the region. For instance, reports discussed with law enforcement state that a leading Sam Gor member
spent US $66 million in one day in a Macau casino, and was sued for around US $1.4 million by a casino
in Singapore in November 2017 for failing to settle a debt. Law enforcement sources also confirmed that
the same syndicate member had previously made visits to a major casino in Cambodia.

Another member of the Sam Gor syndicate that frequented casinos in the past is Hsieh Tsung Lun, who
was arrested in 2018 and extradited from Cambodia to Myanmar. According to regional enforcement
officials, Hsieh organized shipments of large quantities of methamphetamine as well as heroin for the
syndicate while he was working out of a casino in the Golden Triangle. The same sources have confirmed
that Hsieh frequently visited the same major Cambodian casino prior to his arrest.

commission from casinos derived from the amount In recent years, junket operators have been
of money gambled by the players within VIP gradually relocating their business operations and
gaming rooms that are unavailable to mass market players to small-scale casinos in Southeast Asia
gamblers. A growing number of junket operators after regulatory reforms transformed the gaming
also now run online and proxy gambling platforms. market in Macau SAR.73 While the Macau SAR
gaming industry once had 235 junket promoters
Although junket operators began as recruiters of and a multitude of VIP rooms spread throughout
high net worth gamblers, they quickly diversified the local casinos, only 18 licensed junket operators
into credit providers to satisfy the need of remain active as of January 2024.74 This has
customers wishing to evade capital controls, and as resulted in a profound shift in the industry’s entire
a result also had to become debt collectors when landscape throughout Southeast Asia.
loans were not repaid. Since both of these key
business lines are illegal in mainland China, junket This displacement has been accompanied by an
operators relied on other means, and particularly intensification in a wide range of criminality in
connections to organized crime, to collect such vulnerable parts of Southeast Asia, and particularly
debts. In the early 2000s, forward-thinking junkets the Mekong region. More specifically, the junket
began to diversify into online gambling, first for sector in the region has been exposed for its heavy
their core clients in Asia, then globally. This vastly
73 Centre for Gaming and Tourism Studies, Macao Polytechnic
expanded their potential market and increased University, 2023.
revenues exponentially (see below). 74 Ibid.

31
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Figure 3. Change in licensed junket operators in Macau SAR, 2020-2024

2020 2021 2022 2023 2024

95 85 46 36 18
licensed junket licensed junket licensed junket licensed junket licensed junket
operators operators operators operators operators

Source: Gaming Inspection and Coordination Bureau (DICJ) of Macau SAR.

infiltration by organized crime for industrial-scale to the document, Crown Melbourne and Crown
money laundering and underground banking Perth casinos had partnerships with several junket
operations, as well as increasingly clear links to operators, including the Suncity, Neptune (later
drug trafficking and cyberfraud. These connections renamed Guangdong), Meg-Star, Song, Chinatown,
to transnational organized crime have become Tak Chun, Jimei, and Oriental Group junkets, which
strikingly apparent in recent years, stemming largely were used as conduits for money laundering and
from wide-scale deficiencies in casino supervision other illicit activities. The document also shed light
and enforcement of related anti-money laundering on the significant scale of revenues generated by
measures including customer due diligence (CDD) junket operations at the Crown casinos.
and know-your-customer (KYC) principles, source
and distribution of funds analysis, beneficial owner Between July 2015 and June 2020, Crown
requirements, and financial reporting by operators Melbourne’s reported turnover (cross-table
which are particularly prevalent in several high-risk transactions or rollings) from its VIP program
jurisdictions.75 was AU $220.8 billion (equivalent to US $162
billion), and a substantial proportion of that
Recent law enforcement action targeting junket amount was from Asian gamblers. During the
operators and organized crime figures has same period, Crown Melbourne made over AU $1
demonstrated that many junkets operating in billion in junket revenues (equivalent to US $732
East and Southeast Asia and the Pacific have been million), while Crown Perth’s revenue from junket
extensively infiltrated by organized crime groups operations exceed AU $320 million (equivalent to
(see case study chapters below for more detailed US $234 million).77 In 2023, AUSTRAC and Crown
analysis). In Australia, for instance, major Asian jointly agreed that the casino operator should
transnational organized crime groups including pay AU $450 million penalty for 546 breaches of
the Sam Gor drug trafficking network and 14K anti-money laundering laws revealed during the
triad have been identified as using junkets to country’s inquiry into casinos and junkets.78 In
move money through Australian casinos. In March 2020, AUSTRAC also assessed that the general risk
2022, the Australian Transaction Reports and profile of persons involved in junkets is high, further
Analysis Centre (AUSTRAC) issued a Statement of pointing out that, under current arrangements,
Claim filed in Federal Court in relation to money it is not possible to clearly determine beneficial
laundering activities at Crown Casinos.76 According ownership and control of the funds.79

75 Government of New South Wales, inquiry under section 143 of 77 Ibid.

the Casino Control Act 1992, February 2021 at p. 67. 78 Australian Transaction Reports and Analysis Centre, 2023.
76 Statement of Claim, Chief Executive Officer of the Australian Accessed at: https://www.austrac.gov.au/news-and-media/
Transaction Reports and Analysis Centre, March 2022. media-release/austrac-and-crown-agree-proposed-450-million-
Available at: https://www.austrac.gov.au/sites/ default/ penalty.
files/2022-03/20220301_Statement_of_Claim_ stamped_0.pdf). 79 Australian Transaction Reports and Analysis Centre, Money
Laundering and terrorism Financing Risk Assessment: Junket
Tour Operations in Australia, 2020. Accessed at: https://www.
austrac.gov.au/sites/default/files/2020-12/JTO_2020_FINAL.pdf.
32
 Regional Overview

Figure 4. Money laundering vulnerabilities associated with junket operators

Money laundering vulnerabilities associated with junkets

Offsetting the ledger

through bank Commingling of funds Movements of money
accounts located in and transactions of Storing illicit proceeds Use of underground
Advanced cash and through bank
different countries, many high-rollers in in junket accounts banking to remit
credit for gamblers accounts in multiple
making no need for the same account money
countries
physical and digital owned by the junket
movements of money

Exponential factors
- Ultimate beneficiaries of junkets are organized crime or connected to organized crime
- Junkets operate in countries with weak regulatory and enforcement mechanisms

Source(s): UNODC elaboration based on consultations with regional authorities and international experts.

Another example occurred in the Philippines, where According to filings by the Bangladesh Central
a number of licensed casinos and junket operators Bank with the New York Southern District Court in
and representatives were found to have played January 2019 as well as records in the Philippines,
an important role in laundering approximately US Alvin Chau was the direct recipient of a large
$81 million stolen in a cyberattack attributed to portion of the stolen funds that were laundered
the Lazarus Group80 from the Bangladesh Central through the Suncity junket in the Solaire Hotel and
Bank in 2016. While the money initially passed Casino.81
through banks and remittance companies, the
paper trail disappeared after the money was More specifically, the documents confirm that the
transferred to casino junket operators, agents and money launderers had exchanged Solaire Casino
players including Bloomberry Hotel and Resort’s chips worth 903.7 million pesos or US $20 million for
Solaire Casino, Eastern Hawaii Leisure Company, an equal amount of non-negotiable Suncity junket
Suncity junket, and Goldmoon junket (see below chips which were then systematically transmitted
breakdown chart). through the junket operator as VIP rollings over
several weeks and ultimately ended up in casinos
in jurisdictions outside of the Philippines. This
was later confirmed by Solaire’s lawyer during the
associated Senate Committee on Accountability
of Public Officers and Investigations (Blue Ribbon
Committee) hearings.82

Beyond the Bangladesh bank case, a 2023 study

conducted by the Philippines’ Anti-Money
Laundering Council (AMLC) into suspicious
CCTV surveillance image presented during 2016 senate inquiry into the
Bangladesh bank heist showing tranches of cash being exchanged for transactions associated with casino junkets found
casino chips and cash returned by a Philippines-based junket operator multiple instances of junket operators failing to
following the inquiry.
report on covered transactions, in breach of junket

81 Philippines Ministry of Justice, 2020. Accessed at: https://

elibrary.judiciary.gov.ph/assets/dtSearch/dtSearch_system_
80 Lazarus, also known as APT38, is a notorious Advanced files/dtisapi6.dll?cmd=getdoc&DocId=93584&Index=*47d2af9
Persistent Threat (APT) actor best known for conducting high- 3eea3c41eede94fa5db1eb960&HitCount=16&hits=b2+d6+f5+1
profile financial cyberattacks and engaging in cyber espionage. 3e+185+194+227+48f+699+784+7af+80b+845+9b7+b03+b16+-
Their operations often involve the deployment of sophisticated &SearchForm=C:%5celibrev2%5csearch%5csearch_form.
malware and more recently have been attributed to billions of 82 Senate Committee on Accountability of Public Officers and
dollars in stolen cryptocurrency. Investigations (Blue Ribbon Committee), 2016.

33
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Figure 5. Distribution of stolen funds in the Bangladesh bank heist through Philippine casinos and junkets

Cash stolen from the Bangladesh central bank was routed and laundered through casino and junket operators
which were exempt from anti-money laundering laws in the Philippines until 2017.

Suncity
The junket receives either 903 million pesos (US $19 million) according
to Solaire’s testimony in the Senate, or around 700 million pesos
SOLAIRE (US $15 million) according to Suncity.
RESORT &
CASINO Gold Moon
100 million pesos (US $21 million) went to the junket. 33 million pesos
1.365 billion pesos (US $700,000) of the total was gambled and the rest is unaccounted for.
(US $28.8 million)

Solaire’s premium program

331 million pesos (US $7 million) went to Solaire’s premium program.

EASTERN
HAWAII Midas Hotel and Casino
LEISURE 550 million pesos (US $11.6 million) went to the Eastern Hawaii junket's
gambling accounts at Midas Hotel.
1 billion pesos
(US $21 million) Operator of the Eastern Hawaii junket
450 million pesos (US $9.5 million) went to the operator of the Eastern
Hawaii junket as payment for previous gambling debts. The operator
denied wrongdoing and returned. 700 million pesos (US $15 million) to
the Anti-Money Laundering Council.
Note: Pesos converted at $1 = 47.4 pesos, the rate at the time of senate hearings. *These junkets operated inside and had accounts at Solaire.
Source: UNODC elaboration based on Philippine senate inquiry testimony.

agreements.83 The study also observed a dramatic the use of junkets by drug traffickers for payment
rise in the volume of suspicious transaction disbursement and money laundering, as well as by
reports (STRs) which increased from 64 to 1,021 kidnappers in the Philippines for ransom payments.86
between 2021 and 2022, together with growth in For instance, in 2018, Philippine authorities
the value of STRs which rose from US $16 million dismantled a synthetic drug manufacturing facility in
to more than US $170 million during the same Malabon City and arresting 9 suspects.87 According
period.84 According to discussions with regulatory to law enforcement and criminal intelligence
authorities in the Philippines, the sudden increase officials involved in the case, shipments of
is in part attributable to enhanced enforcement precursor chemicals sourced by the drug syndicate
measures and reporting requirements as well as were arranged at a VIP room in Macau SAR while
the crackdown on Macau SAR junket operators payments were subsequently arranged through a
and developments in the e-junket space. Notably, junket operator and disbursed using casino chips.
several STRs examined in the study relate to Concerningly, as reported by law enforcement,
predicate offences including drug trafficking as those arrested were known to have frequented
well as a criminal scam syndicate that was under integrated casino resorts in the Philippines, namely
investigation.85 the Solaire Hotel & Casino, where Suncity VIP rooms
were operating at the time. It is also worth noting
These findings are consistent with reports by law that Philippine regulatory authorities have cited a
enforcement authorities which have confirmed high level of non-compliance and non-cooperation
during inspections of casino junkets operating in the
83 Anti-Money Laundering Council of the Philippine, Analysis
of Suspicious Transactions Associated with Casino Junkets, country.88
2023. Accessed at: http://www.amlc.gov.ph/images/PDFs/
PR2023/2023%20JAN%20ANALYSIS%20OF%20SUSPICIOUS%20
86 Meetings with national law enforcement and financial intelligence
TRANSACTIONS%20ASSOCIATED%20WITH%20CASINO%20
officials in East and Southeast Asia, 2023.
JUNKETS_FINAL.pdf.
87 Ibid.
84 Ibid.
88 Consultations with regional casino regulatory authorities, 2023.
85 Ibid.

34
 Regional Overview

Figure 6. Volume of STRs related to junkets in the Figure 7. Value of STRs related to junkets in the
Philippines, 2016-2023 Philippines, 2016-2023

1,600 12,000

In PHP millions, by year of submission

1,400
Total count, by year of submission

1,334 10,000
1,200
1,021 8,000
1,000

800 6,000

600
4,000
400
2,000
200
64
0 0
2016 2017 2018 2019 2020 2021 2022 2023 2016 2017 2018 2019 2020 2021 2022 2023

Source: Anti-Money Laundering Council of the Philippines, 2023. Source: Anti-Money Laundering Council of the Philippines, 2023.

Junket-based money laundering and underground of cash and increasingly cryptocurrency while
banking methods bypassing the formal financial system.

Recent law enforcement action has exposed several As demonstrated by cases in the region, it is
sophisticated methods devised and exploited by common for funds held in junket representative-
transnational organized crime groups to facilitate controlled casino accounts to offset against money
money laundering using casino junkets. Primary in accounts held overseas partially derived from
among them are offsetting arrangements which onshore individuals known as ‘cash collectors’
were first developed for cross-border gambling in who move money from domestic organized crime
Macau SAR and have since evolved as a solution groups to junket operator casino accounts.90 This
for underground banking and money laundering can include proceeds of crimes including drug
utilized by organized crime. Fundamentally, these trafficking, cybercrime, fraud, and scams, and
transactions are made outside the formal banking human trafficking, among others. Notably, while
sector and pose a high level of risk in the case of more complex and less prevalent, authorities have
casino junkets as they circumvent international also reported the use of an offsetting method
funds transfer reporting requirements and facilitate whereby money to fund players’ junket activity is
the laundering of domestically generated proceeds raised by directing the player to purchase shares in
of crime.89 a foreign company, rather than simply depositing
the money into an offshore bank account.91
Offsetting is used as a means of transferring
value between jurisdictions via financial credit Compounding the challenge further, several
and debit relationships between entities in industry-wide deficiencies in casino and junket
different countries. Organizations facilitating management and supervision that have been
offsetting arrange for money to be debited from uncovered across the region in recent years have
an entity in one jurisdiction to be credited to a clearly exacerbated the situation and the level of
corresponding (sometimes the same) entity in a infiltration of organized crime. This includes the
second jurisdiction, requiring the facilitator to have following:
fund access in both. In the case of casino junkets, a
gambler (high-roller) deposits money into a junket • Prevalence of multi-party transactions
account or stakes using credit issued by the junket and cash deposits: loosely regulated junket
or other assets in one country and is subsequently accounts can receive large cash deposits from
issued a corresponding amount of value in another. a multitude (tens to hundreds) of individuals
While the funds are theoretically transferred for over a given reporting period, with only
the purpose of gambling, misuse of this mechanism some depositors registered with the junket
has enabled organized crime to move vast amounts (individuals who are neither operator nor
agent) – thereby violating most casinos’
89 Australian Transaction Reports and Analysis Centre Money
Laundering and terrorism Financing Risk Assessment: Junket practice of only allowing junket operators
Tour Operations in Australia, 2020. Accessed at: https://www.
austrac.gov.au/sites/default/files/2020-12/JTO_2020_FINAL.pdf. 90 Ibid.
91 Ibid.

35
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Figure 8. Simplified informal money transfer model via casino junket offsetting arrangement

DEPOSITS DISBURSEMENTS

TRANSACTION VALUE COLLECTED CREDIT ISSUED AND FUNDS DISBURSED

FROM JUNKET CLIENT 1 BY TO ‘VIP’ GAMBLER (JUNKET CLIENT 1)
JUNKET OPERATOR, AGENT, IN JURISDICTION B
OR DEBT COLLECTOR
JUNKET OPERATOR ACCOUNT
JURISDICTION B

CIRCUMVENTION OF THE FORMAL

BANKING/FINANCIAL SYSTEMS

JUNKET OPERATOR ACCOUNT TRANSACTION VALUE DEBITED (OFFSET) JUNKET CLIENT 1 (RECIPIENT)
OR ASSET PORTFOLIO IN FROM CLIENT 1 IN JURISDICTION A BASED IN JURISDICTION A
JURISDICTION A
Source: UNODC elaboration based on extensive consultations with regional law enforcement and financial intelligence officials, 2023.

or agents to transact on junket accounts. At junkets to be individuals and transact with them
the same time, too many agents allowed to on that basis. However, it is clear that some
transact on a junket’s accounts may diminish junkets operate as part of large international
effective control over transactors, resulting in businesses. This grey area has been found to
authorities having limited view of gambling lead to different levels of application of due
account behaviour and banks unable to isolate diligence which subsequently increases the
junket-related transactions from other casino vulnerability associated with understanding of
transactions. This presents obvious transaction beneficial ownership and control. At the same
monitoring and analysis challenges. time, diversification of junket tour operations
• Misuse of VIP cash accounts92: casino operators into a range of different business lines increases
across the region often open bank accounts opportunities for commingling, and presents
under their business for their junket partners difficulties for banks in understanding the
which have been observed to facilitate the origin of funds.
storage and movement of significant amounts of • Prevalence of multiplier betting in the junket
money, both domestically and internationally, industry: multiplier betting refers to a form
by transnational organized crime. On a per- of ‘under-the-table’ gambling in which a bet
transaction and per-customer basis, the junket formally denominated at the casino gambling
sector is also significantly exposed to the risks tables only represents a fraction of the total
associated with high-value cash activity. The amount of a private bet made between gamblers
destination of large cash withdrawals from and junket operators to avoid gaming revenue
junket accounts represents a key intelligence levies. It allows clients to pre-negotiate their
gap throughout East and Southeast Asia and preferred payment method, betting currency,
the Pacific. and cash-out method while increasing the
commissions received by the junket promoter,
• Treating junket operators as individuals rather and can be used as a tactic to conceal the
than corporate entities: discussions with casino total amount of money transmitted through
regulators and financial intelligence authorities the casino or junket by an individual bettor
indicate that casino operators often consider and obfuscate the source and destination of
funds. Such arrangements are understood to
92 See below case studies on Alvin Chau of Suncity Junket and Levo
Chan of Tak Chun Junket.
have grown in popularity due to most junket

36
 Regional Overview

Figure 9. Model of simplified junket lifecycle and misuse by organized crime

Jurisdiction A

Junket players

International Electronic Domestic Electronic

Cash Bank Cheque
Funds Transfer Funds Transfer

ORGANIZED CRIME ORGANIZED CRIME

GROUP GROUP

Jurisdiction A

CASH COLLECTOR JUNKET CASH COLLECTOR

OPERATOR
ACCOUNT

JUNKET OPERATOR (JO) JUNKET OPERATOR (JO)

Jurisdiction B

JUNKET
OPERATOR
ACCOUNT

JO 1 JO 2 JO 3
ACCOUNT ACCOUNT ACCOUNT
AT CASINO AT CASINO AT CASINO

JUNKET JUNKET JUNKET

PROGRAMS PROGRAMS PROGRAMS

CASH COLLECTOR CASH COLLECTOR

Jurisdiction B
Junket players

ORGANIZED CRIME ORGANIZED CRIME

GROUP GROUP

Note: Both junket players and cash collectors seeking underground banking and/or money laundering services through junket operators may
transfer funds directly into junket operator-held accounts which have been set up by partner casinos. Junket operators will ‘offset’ the debited
amount received in one jurisdiction and credit the corresponding amount in another.
Source: Extensive consultations with regional law enforcement and financial intelligence officials, 2023.

37
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

customers in Macau SAR originating from

mainland China. These customers do not—and
in any case cannot—bring money with them to
play due to strict capital controls and a nation-
wide gambling ban in mainland China, and
instead rely on credit issued by junket agents.
For instance, should a customer request a HK
$1 million credit, the junket agent can request
the casino to provide HK $100,000 worth of
chips, with the understanding between the
junket agent and customer that a ten times
multiplier is in effect.
• Use of unlicenced money service businesses
(MSBs): in several markets, use of unlicenced Daily currency exchange rate table including Tether cryptocurrency
advertised by a licensed junket operator in the Philippines, August
money transfer businesses lending gambling 2023. Source: official social media business accounts.
patrons, often from East and Southeast
Asia, funds to gamble have been identified As depicted in figure 9 above, the resulting
in numerous criminal cases to play a key conditions have resulted in a complex and
facilitation role in money laundering. The vulnerable casino junket lifecycle easily exploited
origin of the funds is often unknown and can by transnational organized crime and junkets
potentially related to criminal activity. The facilitating offsetting arrangement.
funds from the unlicenced MSB are loaned to
the gambler, and the gambler will repay the The ‘Vancouver Model’
funds within another jurisdiction where only
a domestic transaction will occur. This method Among the best-documented examples of misuse
also assists in circumventing strict currency of casinos and junkets (licensed and unlicensed)
controls in some jurisdictions and allows access by organized crime relates to what has been
to capital to gamble in different countries. It coined by law enforcement and industry experts
also allows the money operator to convert cash as the ‘Vancouver model’ for money laundering
from one jurisdiction into a bank deposit within and underground banking. While the model was
another. initially uncovered through the Cullen Commission
• Growing use of cryptocurrency by major money laundering inquiry93 in Canada, authorities
online casino and junket operators: while and experts have identified similar methods
use of cryptocurrencies by online casino and exploited by organized crime networks operating
junket operators is not authorized by any though casinos in Australia, Macau SAR, and
casino regulators in Southeast Asia, UNODC several countries including Cambodia, Lao PDR,
has observed widespread advertising of Myanmar, and the Philippines.94 According to the
cryptocurrency exchange and payment services inquiry, the model, which was devised by Asian
being provided by both licensed and unlicensed transnational organized crime groups despite
operators across the region. junkets not being formally permitted in Canada,
successfully laundered millions of dollars through
casinos in British Columbia between 2008 and
2018, including proceeds generated by drug cartels
based in Mexico and countries in South America.
The inquiry also cited surveillance footage in which
bags of cash were brought into casinos to convert
to casino chips, play a few games and cash out as
clean money (sometimes known as short play).

93 Commission of Inquiry into Money Laundering in British

Columbia. Accessed at: https://cullencommission.ca/com-rep/.
94 Meetings with regional law enforcement and financial
intelligence officials, 2023.

38
 Regional Overview

Figure 10. ‘Vancouver model’ for money laundering through British Columbia’s casinos

Source: Cullen Commission of Inquiry into Money Laundering in British Columbia.

The Vancouver model combines elements of While this phenomenon has occurred in countries
traditional hawala money laundering methods and with robust regulatory capacity such as Australia
mixes them with cash-in, cash-out strategies. It can and Canada, many of the world’s largest junket
be understood through the following process: operators remain active in casinos located
1. A person in Jurisdiction X (who may or may in higher-risk jurisdictions of Southeast Asia.
not have been involved in a crime) attempts Considering the relatively minimal regulation and
to transfer substantial funds out of that enforcement to counter money laundering in the
jurisdiction and may circumvent cash export region, the availability of junket operators should
control laws. be seen as a serious money laundering risk likely to
2. The person transfers funds to a criminal group be accompanied by other criminal activity. It is also
in Jurisdiction X and then travels to Jurisdiction important to note the role of junket representatives
Y. (often referred to as agents), who work on behalf
3. A criminal gang in Jurisdiction X arranges for of junkets in return for commissions. Some of
its associates in Jurisdiction Y to transfer an these representatives open accounts with junket
equivalent amount of the original transfer operators and store large amounts of cash which
amount to someone now in Jurisdiction Y can be advanced to gamblers. For instance, in
(mostly in the form of cash derived from December 2020, the People’s Procuratorate of
criminal activity which needs to be laundered). Jiangsu Province of China indicted five people
4. The person enters the casino, converts the for running casino rooms in China while acting as
money into chips, then makes several low value representatives for major junkets. They opened
bets and cashes out. junket accounts with Suncity, Tak Chun and
5. This person traded the chips for clean cash or others from which advanced credits were sent to
cash checks, and now has both laundered funds gamblers. In addition, they opened and managed
for the criminal group through the original casino rooms in China where screens of gambling
transfer and bypassed the cash exit control tables from the Tak Chun VIP room in Manila were
laws in Jurisdiction X for their own benefit. live streamed. A minimum of RMB 170 million
(approximately US $27 million) was transacted

39
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

through the indicted operators since 2016 before rapid emergence of technology including mirror
the indictment.95 websites,99 cryptocurrency, and third-party
betting software or so-called ‘white-label’ service
Law enforcement authorities have also reported the providers100 in Southeast Asia has meant that it
extensive misuse of the Suncity VIP room network has never been easier to set up an online casino
together with multiple land-based casinos across operation with limited technical expertise and
the region including Golden Triangle-based casinos overhead capital, irrespective of gambling laws
for money laundering and underground banking within a given jurisdiction. Developments in
by organized crime. More specifically, analysis of internet payment technologies have also assisted
financial intelligence by both international and in supporting the regional online casino industry
regional law enforcement confirms the use of with the rise in the number of third-party payment
these establishments for facilitating payments to providers, e-wallets, and other digital payment
drug traffickers and arranging the production of solutions to support online transactions and in-app
synthetic and other drugs in and around the Golden purchases. Additionally, the massive, growing scale
Triangle. of the industry has drawn in an unprecedented
number of young employees into the sector, posing
Proliferation of online casinos and their misuse for opportunities for some and risks for others given
money laundering and underground banking the surge in related recruitment fraud and human
trafficking.
In recent years, the rapid proliferation of the
‘offshore’ online casino industry (including online Advances in internet speed and technology
sports betting) in several high-risk jurisdictions in have also helped to facilitate more sophisticated
Southeast Asia, and particularly the Mekong, has online games and gambling including live-dealer
been reported as a growing concern by authorities casino streaming which can essentially replicate
in and beyond the region. Macau SAR junket the same experience for a gambler as land-based
operators and their close criminal associates have casinos. With the introduction of mobile apps, the
been key drivers behind this trend, pushing for its proliferation of online betting and online casinos
acceleration following enhanced law enforcement has also increasingly become available to mass
and regulatory pressures in mainland China markets. Online gaming and the rise of social
together with mobility restrictions brought on by gaming101 has also been changing the industry and
the COVID-19 pandemic which curbed travel for VIP its associated money laundering risks as so-called
gamblers. Both unregulated and under-regulated ‘crypto casinos’ and non-fungible token (NFT) play-
online casinos run by junket operators (sometimes to-earn games become more popular.102
referred to as e-junkets), while themselves highly
profitable, also served as a useful channel of According to latest segment forecasts, the formal
credit settlement between junkets and their online gambling market is projected to grow to
clients, providing additional utility in being able to
99 The vast majority of online gambling platforms operating in
effectively disguise proceeds of organized crime as Southeast Asia exploit what are known as ‘mirror websites’; exact
legitimate online betting profits. Most, if not all, of replicas of primary betting websites housed under different URLs
the largest junket operators had such operations, which are often algorithmically generated and used to evade
regulatory attention, effectively staying several steps ahead of
with smaller junkets acting as customer referral authorities by running hundreds of mirror websites on the same
agents.96 server to ensure services remain uninterrupted in the event that
a URL is shut down.
100 White-label gambling websites are similar to franchises, with
The shift into online casinos has been exhibited betting operators being able to outsource every component of the
by both a major increase in online betting business including sophisticated and secure betting technology,
offshore licensing schemes, website design, customer data and
and associated gambling platforms as well as management, branding and marketing materials, and operating
the expansion of online betting products and license from third-party service providers.
payment methods.97,98 More specifically, the 101 The term ‘social gaming’ refers to online video games accessed
mainly through social media platforms. In addition to being
95 People’s Procuratorate of Xinwu District, Wixi City, Jiangsu entertained while playing, users share the gaming experience
Province, Indictment, December 2020, Available at: https:// with their network on the platform they’re on. By integrating
www.12309.gov.cn/12309/gj/js/wxs/wxskfq/zjxflws/202109/ into commonly used platforms, these types of games can attract
t20210923_10584144.shtml. audiences that aren’t typically interested in video games.
96 Asian Racing Federation, 2023. 102 International Center for Gaming Regulation. Online Casinos,
97 Asian Racing Federation, How China’s Crackdown on Illegal Alternative Payment Mechanisms and the Associated Financial
Betting Impacts Global Betting Markets. September 2021. Crime Risks, 2022. Accessed at: https://www.unlv.edu/sites/
98 International Center for Gaming Regulation. An assessment of default/files/media/document/2022-02/IGCR-OnlineCasinos-
AML risks linked to accepting crypto-payments in the gambling AlterPaymentMechanisms-FinanceCrimeRisks.pdf.
40
sector (A regulator’s guide), May 2023.
 Regional Overview

Live-dealer casino employees in Kokang, SR1 of Myanmar.

Source: Criminally implicated New Jinjiang Hotel and Werner International hybrid casino, 2022.

more than US $205 billion by 2030,103 with the can be misused to serve as integral components
Asia Pacific region representing the bulk share of the regional underground banking and money
of market growth between 2022 to 2026 at a laundering infrastructure (see detailed analysis in
projected 37 per cent.104 In the Philippines alone, below case study section). It has also provided more
there are currently 34 licensed offshore operators channels for commingling recreational gambling
(POGOs), each of which is permitted to operate up flows with proceeds of crime.
to 10 online gaming platforms and sub-license 10
service providers. At the time of writing, industry For instance, following a surge in criminality
experts in the Philippines project gross gaming related to incidents of murder, kidnapping, money
revenue (GGR) for 2023 to reach over US $438 laundering and growing influence of organized
million, up from US $109.2 million prior to the crime, in 2022 Philippine authorities ordered the
COVID-19 pandemic in 2019 and more than double shutdown of 175 offshore gambling firms and
the amount generated in 2022.105 It is worth noting deportation of approximately 40,000 foreign
however that these projections do not take into workers.106 That same year, a total of 461 individuals
account illegal, unlicensed online casino operators, were arrested in Thailand for involvement in illegal
and that the offshore online casino industry is also online gambling websites, with authorities blocking
highly prevalent in countries including Cambodia, more than 6,000 website URLs involved.107 Thai
Lao PDR, and Myanmar, although very little data authorities have noted that illegal gambling flows
is available due to the industry operating in a within the country have totaled billions of dollars in
grey space due to lack of formal, functioning, and the first half of 2023, reporting that one of the largest
enforced regulatory frameworks. networks operating in Thailand under investigation
was found to have generated illegal gambling
The growth of online gambling in Southeast Asia is revenues totaling more than US $500 million per
not a new phenomenon and in fact has been taking month.108 Similarly, in Malaysia, online gambling-
place for years. It is part of the broader changing related STRs have nearly doubled between 2019 -
model of the region’s casino and junket industry – 2022, totaling more than 42,000 reports, with the
one that has steadily pivoted away from identifying value of related STRs also increasing dramatically
high-rollers and facilitating their luxury gambling to more than MYR 26 billion or US $5.5 billion
tourism, and towards the broader targeting of the in transaction volume during the same period,
premium mass market population online. With representing a 273 per cent increase.109 Authorities
that said, surging law enforcement action reported in China additionally reported more than 37,000
throughout East and Southeast Asia has highlighted cases involving cross-border and online gambling,
the fact that, like land-based casinos, online casinos with operations nationwide cracking down on
2,600 online gambling platforms, more than 1,100
103 Polaris Market Research, Online Gambling Segment Forecast,
2022 – 2030. Accessed at: https://www.polarismarketresearch. casinos, as well as in excess of 2,500 illegal payment
com/industry-analysis/online-gambling-market. platforms and underground banks, 1,200 technical
104 Technavio market research report on online gambling: forecast
and analysis 2022 – 2026. Accessed at: https://www.prnewswire. 106 Ministry of Justice of the Philippines, 2022.
com/news-releases/online-gambling-market-size-to-grow-by- 107 Ministry of Digital Economy and Society of Thailand, 2023.
usd-142-38-billion--37-of-the-growth-will-originate-from-apac-- 108 Meetings with national law enforcement and financial
17-000-technavio-reports-301539695.html. intelligence officials, 2023.
105 Asia Gaming Brief, 2023. Accessed at: https://agbrief.com/news/ 109 Ibid.
philippines/24/07/2023/pogo-tax-payments-rise-127-percent-
yearly-in-2022/.
41
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Figure 11. Online gambling market size by region 2018-2030 (US $ billion)

Growth Contributed by
APAC

37%

Growth for 2022

11.82%
Source: Polaris Market Research Analysis, 2023.

support teams, and 1,600 platforms promoting structure that both share aspects of, where illegal
illegal gambling.110 street bookmakers have traditionally operated.113
Illegal online betting operators in East and
Associated challenges and risks Southeast Asia have emulated this structure, albeit
with a greater volume of smaller regional online
Despite intensifying regulatory and enforcement operators acting as mid-level agents for the biggest
efforts across East and Southeast Asia, it is clear grey market Asian bookmakers.
that millions of new online betting customers have
emerged following the COVID-19 pandemic.111,112 Under this traditional pyramid structure, illegal
This has in turn broadened the customer base for betting syndicate organizers issue credit down
licensed and unlicensed betting operators based in the chain through a roster of ranked agents and
countries including Cambodia, Lao PDR, Myanmar, middlemen to brokers at the bottom who ultimately
the Philippines, and Viet Nam, while boosting acquire customers by assessing creditworthiness
illegal betting revenues and creating new outlets and taking bets. Once a bet is placed, the
for money laundering and underground banking. transaction is passed upwards to hedge liability
At the same time, as the Asia-facing junket industry and aggregate risk, with each level of the network
has longstanding connections to various Macau taking a commission along the way to the organizer.
SAR-based triad groups, the continued geographic In the case of online betting markets, however,
diversification by junket operators, together with while bets are still taken at street level, customers
the advent of the e-junket model an dispersion of can increasingly place bets directly on the illegal
online gambling operations across vulnerable parts websites by themselves. Similarly, so-called super
of the Mekong, risks providing huge new revenue and master-agents to whom brokers report will
streams for organized crime and their partners often run their own online betting sites, purchasing
while fueling further consolidation and expansion access to syndicate ‘materials’ complete with
of syndicates already operating in te region. premade web design, content, and a registered
domain. This network of regional and national level
By their nature, illegal online betting operations sites hedge liability between one another as well
function similarly to most organized crime as with the larger ones up the pyramid. At the top,
syndicates. This is reflected by the common the biggest grey-market betting sites in the region
accept billions of dollars in bets annually, with their
110 State Council of the People’s Republic of China,
2022. Accessed at: https://english.www.gov.cn/
liquidity being so high that major global sports
statecouncil/ministries/202212/29/content_ betting sites hedge with them.114
WS63ad52a3c6d0a757729e4e37.html#:~:text=China%20
cracks%20over%2037%2C000%20cross%2Dborder%20 113 Koleman Strumpf, ‘Illegal Sports Bookmakers’, 2003. Available at:
gambling%20cases%20in%202022&text=BEIJING%2C%20 https://www.unc.edu/~cigar/papers/Bookie4b.pdf.
Dec.,in%20a%20statement%20on%20Thursday. 114 David Forrest, ‘Understanding the Impact of Asian Betting
111 UNODC consultations with industry experts and academics in Markets’, International Association of Gaming Regulators
Southeast Asia, 2022. Webinars, June 2017. Available at: www.iagr.org/membership/
112 Asian Racing Federation, A Report of Illegal Betting Growth webinars.
During the COVID-19 Pandemic, May 2021.

42
 Regional Overview

Wan (Broken Tooth) Kuok Koi and cryptocurrency-integrated ‘e-junkets’

Dragon Coin Operating Model

Among the best-known examples of criminal convergence
around online casinos, e-junkets, and cryptocurrency relates to
Gamblers use local currency longtime senior member of the 14K triad, Wan Kuok-Koi, and the
to buy Dragon Coin (DRG)
announcement of his 2017 Initial Coin Offering (ICO) for the ‘HB
Token’ cryptocurrency, also known as ‘Triad Coin’, as well as his
involvement in at least two other related projects, ‘Dragon Coin’
They then travel to a
participating casino (DRG) and the Saixigang ‘smart city’ Industrial Park in Karen State,
Myanmar. The Triad Coin ICO was reported to have generated
the sale of 450 million tokens, raising US $750 million through
Koi’s company, World Hongmen Investment, in partnership with
Internet Technology Company 1, which would develop and operate
At the casino, they can
exchange DRG into Dragon Global
affiliated online poker tournaments.110 Triad Coin traded exclusively
Chips (in-game token) on A.Top, an exchange launched by All In Group, a Hong Kong-based
company registered in April 2018.111 The group’s sole shareholder
These chips can be used
was reported to be 3658 Investment and Management, a business
to play various games
in the casino
partner of Internet Technology Company 1.

In practice, clients could purchase Triad Coin with another crypto

or fiat currency, transferring it to the casino operator in exchange
Afterward the chips
can be turned back
into DRG or
for casino credits logged on A.Top’s ‘Allchain’ ledger. In turn,
other currencies clients could effectively wager online, drawing down on the ledger
for losses.112 Similarly, Koi was associated with Macau Dragon, a
company which launched the joint Dragon Coin (DRG) ICO with
Withdrawn funds can be
disbursed to gamblers
in a preferred jurisdiction
Thailand-based Holding Company 1 in 2018. The project, which has
since been shut down, had planned to integrate cryptocurrency
into high stakes international gambling via partnerships with
Source: Elaboration based on DRG white paper. various Macau SAR-based junket operators. According to the
whitepaper issued by Macau Dragon,113 the project aimed to reduce the 5-7 per cent fee historically
incurred by VIP gamblers using junket-based offsetting arrangements, using blockchain technology to
increase efficiency. The whitepaper states that players would exchange fiat into DRG which would then
be converted into Dragon Chip non-fungible tokens which could later be exchanged back into DRG and
cashed out for fiat and luxury prizes using their smartphone wallet, and does not include any information
concerning measures to address related money laundering concerns.

Both Triad Coin and Dragon Coin exhibited similar market activity characterized by rapid price increases
and equally dramatic decreases, culminating in a stoppage in trading activity. This indicates possibility
of the crypto’s use in a money laundering and/or so-called ‘pump and dump’ investor fraud scheme.
Additionally, on 9 December 2020, the U.S. Treasury OFAC designated Koi as “a leader of the 14K triad,
one of the largest Chinese organized crime organizations in the world that engages in drug trafficking,
illegal gambling, racketeering, human trafficking, and a range of other criminal activities, including
bribery, corruption, and graft.”114 The U.S. Treasury also alleges that the Hongmen Association “has
managed to co-opt elite figures in Malaysia and Cambodia” while establishing “a powerful business
network involved in the development and launching of crypto currencies, real estate, and … a security
company.”115
118 119 120
115 116 117

115 UNODC, Internal Threat Assessment on Casinos, Money 118 Dragon Coin whitepaper. Accessed at: https://s3.amazonaws.
Laundering, and Transnational Organized Crime, 2022. com/drg-token/Whitepaper-Dragon.pdf.
116 Ibid. 119 U.S. Department of the Treasury, 2020. Available at: https://
117 HB Token (Triad Coin) whitepaper. Accessed at: https://www. home.treasury.gov/news/press-releases/sm1206.
yibencezi.com/notes/79352. 120 Ibid.

43
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Figure 12. Traditional pyramid nature of illegal betting

Organizer

Super
Master Agent

Commission taken at each level

Chief/Master Agent
Credit is issued

Agent

Brokers

Customer is Customer is Customer is Customer is

graded graded graded graded

Customers are granted credit

Clients Customers se�le credit

Source: Elaboration based on Asian Racing Federation State of Illegal Betting Report, 2022 and UNODC internal threat analysis on casinos, money
laundering and transnational organized crime in Southeast Asia, 2022.

Attractiveness of online gambling as a money Based on an examination123 of recent cases in

laundering and underground banking method multiple jurisdictions, the most significant AML
vulnerabilities identified within the online casino
Because of the various anonymous payment sector in East and Southeast Asia and the Pacific
methods available and the fact that authorities include but are not limited to:
have a very limited view of what goes on in
an online gambling account, it is difficult to • Non-face-to-face transactions (anonymity):
verify whether the gambling account is used for non-face-to-face business relationships can
actual gambling or for laundering money and present unique AML risks around identification
underground banking. The online gambling sector and verification of the customer registering
is also characterized by a non-face-to-face element, for the online gambling account. While stolen
minimal compliance staff, and huge and complex identities have been frequently used for online
volumes of transactions and financial flows, which gambling purposes, another vulnerability
are often international in nature.121 The various includes player profiles being set up with
jurisdictions involved and the limited extent to stolen IDs or given to a third party to access the
which the legislation between these jurisdictions account for the facilitation of transactions of
is harmonized further complicate investigations. high-risk clients including criminals, politically
As DNFBPs, the sophistication of the compliance exposed persons (PEPs), or those subject to
regimes instituted by online casino operators sanctions without the appropriate enhanced
lags considerably behind those at banks, making customer due diligence (CDD) procedures.124
online casinos attractive targets for criminals while
123 Findings based on series of UNODC meetings with law
enabling a ‘heads-down’ approach by operators.122 enforcement, financial intelligence, and regulatory authorities in
Southeast Asia, 2023.
121 Online gambling as a money laundering method, Anti-Money 124 International Center for Gaming Regulation, Online Casinos,
Laundering Council of the Netherlands. Accessed at: https:// Alternative Payment Mechanisms and Associated Financial
www.amlc.eu/online-gambling-as-a-money-laundering- Crime Risks, 2023. Accessed at: https://www.unlv.edu/sites/
method/. default/files/media/document/2022-02/IGCR-OnlineCasinos-
122 Ibid. AlterPaymentMechanisms-FinanceCrimeRisks.pdf.
44
 Regional Overview

Figure 13. Pyramid nature of online betting markets in East and Southeast Asia

Hedge Hedge Hedge Hedge

Major Asian Major Asian Major Asian Other Asian
bookmaker 1 bookmaker 2 bookmaker 3 bookmakers International
Sportsbooks

Trading Flow
Trading Flow Trading Flow Trading Flow

National
Master Agent Master Agent Master Agent
May act as a May act as a May act as a
Betting
sportsbook sportsbook sportsbook
Syndicates

Larger
Staking
Regional Super Agent Super Agent Super Agent Super Agent Clients
May sometimes act May sometimes act May sometimes act May sometimes act
as a sportsbook as a sportsbook as a sportsbook as a sportsbook

District
Agent Agent Agent Agent Agent Agent

CLIENTS

Source: Elaboration based on Asian Racing Federation State of Illegal Betting Report, 2022, and UNODC internal threat analysis on casinos, money
laundering and transnational organized crime in Southeast Asia, 2022.

• Third party transactions: representing a laundering scheme that has been observed
vulnerability linked to the non-face to face nature being advertised by several land-based and
of online casinos, third party transactions are online casino operators in high-risk jurisdictions
among the biggest vulnerabilities where money in Southeast Asia. In this scenario, a buyer and
deposited by one player could be withdrawn a seller of illegal goods participate in the same
and deposited into another party’s account. If game. Through a game or bet, the buyer will
Player A deposits via an e-wallet, they can then transfer funds to the seller, who then collects
potentially withdraw to a crypto address that is the funds from their payment account in
owned by another party – this transaction could exchange for the goods. The gambling account
take place as payment for drugs, for example. essentially acts like a bank account. Since
• Miscoding transactions: miscoding transactions the money technically came to the seller
have been relatively commonplace in the through betting, it cannot be easily traced to
online gambling industry in East and Southeast illicit activity. This typology has notably been
Asia, used to avoid government scrutiny. For attributed to major organized crime groups
instance, a charge may appear on a gambler’s operating in the region and their use of junkets
credit card as ‘flower shop’ rather than ‘online for disbursement of large payments.
casino’, making it difficult to identify the • Safe-keeping transactions using online
gambling transaction. gambling account126: a gambling account held
• Gambling in exchange for luxury goods using with an illegal, unregulated, or underregulated
in-game online gambling points: a common provider can be used exclusively for storing
service provided by e-junket operators in East money and hiding it from the authorities. In
and Southeast Asia in which in-game credit this method, the money is being concealed
can be redeemed online and exchanged for and retrieved from the gambling account
high-value items including luxury watches, using either the same payment method or
handbags, vehicles, vacations, and more. underground channels.
• Gambling in exchange for illicit goods
126 Online gambling as a money laundering method, Anti-Money
using online gambling account125: a money Laundering Council of the Netherlands. Accessed at: https://
www.amlc.eu/online-gambling-as-a-money-laundering-
125 Ibid. method/.

45
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

• Widespread unregulated live-dealer proxy smaller platforms at a fee of 1 to 2 per cent to

betting127: authorities in Southeast Asia add additional layers of commingling.130
have reported widespread unregulated and • Beneficial ownership: the risks associated
unauthorized live-dealer proxy betting taking with criminal elements owning or infiltrating
place within junket VIP rooms and online casino an online casino has been demonstrated by
operations.128 This betting modality, which numerous cases and is deemed high by many
poses high levels of money laundering risk authorities consulted during the development
due to challenges with customer identification of this report (see below case study section).
verification, appears most common in countries Moreover, recent cases and information
including Cambodia, Lao PDR, Myanmar, and shared by authorities indicate that numerous
the Philippines, with many large operators payment providers including VASPs have also
in the industry possessing clear connections been infiltrated by organized crime, providing
to known criminal networks (see below an even higher risk for potential money
case study section). Coupled with offsetting laundering. The risks around criminal elements
arrangements through e-junkets and a loose owning, controlling and/or infiltrating the
regulatory environment, this can (and has) casino along with criminal elements owning
allowed unidentified individuals to transfer and/or controlling the payment provider
and launder vast amounts of funds from one should be actively managed and monitored.
jurisdiction into another with a click of a button • Inadequate AML/CDD policy implementation:
or phone call. discussions with law enforcement, financial
• Challenges of funds verification and intelligence, and regulatory authorities in
commingling of proceeds of crime: authorities Southeast Asia have revealed clear and growing
in the region have reported one of the major concerns around the implementation of AML
challenges associated with online casinos to due diligence policies and procedures by online
be difficulties in source of funds verification casino operators. The lack of understanding
and misuse of online gambling platforms and lack of prioritization of risk management,
for commingling proceeds of crime with internal controls, reporting, and anti-money
recreational gambling flows by organized laundering measures has been flagged to
crime groups.129 This challenge is largely the UNODC on several occasions.
result of the variety of available payment • Considerable gaps in awareness, regulatory
providers, including unregulated payment enforcement and investigative capacity:
methods and financial intermediaries that are discussions with authorities in Southeast Asia,
not subject to adequate AML controls, the and particularly those in the Mekong region,
proliferation of underground (unlicensed and/ indicate severely low levels of understanding
or unregulated) online gambling platforms, and both investigative and regulatory
and general lack of customer due diligence enforcement capacity. Low levels of AML
underregulated operators within the regional awareness in the context of online casinos and
industry. Authorities have also reported the potential risks and vulnerabilities have also
use of smaller online casino platforms by been observed.
larger operators affiliated with organized crime • Difficulties in prosecuting predicate offences:
groups to further obfuscate the source of funds while the use of casinos for money laundering
by funneling gross gaming revenues through is not new, the rapid proliferation of online
casinos has made the method more widespread
127 Proxy betting has been seen as a ‘competitive edge’ for the casino
industry in Southeast Asia. It involves one person somewhere
and caused significant challenges for law
outside a casino giving betting instructions to an accomplice (the enforcement in both tracing proceeds of crime
proxy), inside. The proxy buys chips, places bets per instruction, and subsequently prosecuting offenders.
and cashes in the winnings on their behalf. In more sophisticated
operations, casinos can provide a live video feed of table games, Authorities in the region have confirmed
meaning gamblers can watch the game played out from another that their inability to trace funds laundered
jurisdiction using a computer or mobile device while instructing
the proxy via mobile phone. 130 Anti-Money Laundering Office of Taiwan PoC, Risk Assessment,
128 Meetings with law enforcement and casino regulators in 2021. Accessed at: https://www.amlo.moj.gov.tw/media/20211
Southeast Asia, 2023. 832/2021%E5%B9%B4%E5%9C%8B%E5%AE%B6%E6%B4%97%
129 Meetings with law enforcement and financial intelligence E9%8C%A2%E8%B3%87%E6%81%90%E5%8F%8A%E8%B3%87%
authorities in Southeast Asia, 2023. E6%AD%A6%E6%93%B4%E9%A2%A8%E9%9A%AA%E8%A9%95-
%E4%BC%B0%E5%A0%B1%E5%91%8A%E8%8B%B1%E6%96%8
7%E7%89%88.pdf?mediaDL=true.

46
 Regional Overview

through this method has increased use of a including Cambodia, Myanmar, and the Philippines
legal technicality in which they are unable to for physical operations such as large-scale live-dealer
prove beyond a reasonable doubt in court that streaming.132 Some of the largest online casino
the gambled funds correspond to the predicate operators in Southeast Asia have also been observed
offence. Some players may even divide funds to have moved into the white-labelling business in
into several different betting accounts to make recent years, providing a very high level of access
their activity appear less suspicious and create for organized crime groups seeking to establish a
further difficulties for prosecutors. presence in the regional online gambling industry for
• Broadening infiltration of organized crime: the purposes of money laundering and underground
advances in information and gambling-related banking.133
technologies have significantly lowered the
barriers to entry for organized criminal actors These developments are concerning as it is
looking to enter Southeast Asia’s booming understood that unlicensed and unregulated online
online casino industry. These developments, casino operators rely almost exclusively on white-
together with the advent of the ‘white-label’ labelling for their operations, and that those based
model (see below), has attracted a large in or targeting jurisdictions where gambling is
number of new actors into the space while prohibited, particularly in Asia, often turn to white-
effectively decentralizing the regional money labels in an effort to confer legitimacy through
laundering business, creating huge challenges sub-licensing partnerships with providers.134 This,
for law enforcement and financial investigators. in turn, allows white-label-based online casino
operators to appear and advertise as licensed,
White-labelling regulated entities across the region despite not
being subject to any of the oversight of their white-
A major challenge across both regulated and label providers. It also enables them to market as
underregulated gambling jurisdictions in official betting partners of major European sports
Southeast Asia relates to so-called ‘white-label’ teams and leagues including those in the English
service providers. White-label gambling websites Premier League and International Basketball
are similar to franchises, with operators being Federation, among others, while enhancing the
able to outsource every component of the brand’s international exposure. Most concerningly,
business including complex betting software,131 there have been several documented incidents of
website design, customer data and relationship white-label service providers based in Southeast
management, technical support, branding and Asia being implicated in criminal cases relating
marketing materials, and often also operating to human trafficking, money laundering, and
licenses from third-party service providers. White- cyberfraud involving triad networks and other
labelling enables online casino operators to set up organized crime groups in East and Southeast Asia,
a gambling website in a matter of weeks, requiring among other jurisdictions.135
virtually no bookmaking experience and technical
expertise. Recent cases and enforcement action against
online operators and white-labels by gaming
White-label providers are commonly based in Europe regulators outside of the region
for advertising and offshore licensing purposes as
well as less regulated jurisdictions including the Globally, enforcement actions are becoming more
British Virgin Islands, Isle of Man, Costa Rica, Cyprus, common as regulators apply their powers to non-
Curaçao, Malta, and Pacific Islands including Samoa compliant online gambling operators and white-
and Vanuatu, among others, but have also been labels. A sample of recent enforcement actions are
identified in several Southeast Asian countries detailed below and include reference to fines for
AML failures and social responsibility failings (i.e.,
131 Betting websites require highly complex software, providing
functionality including odds-making and risk management, live those failing to prohibit known problem gamblers).
video streaming and sports data feeds, customer relationship
management and technical support, and payment processing,
including cryptocurrency integrated solutions. Software is 132 UNODC threat analysis on casinos, money laundering and
commonly licensed by operators for a flat monthly fee, a transnational organized crime in Southeast Asia, 2022.
percentage of bettors’ losing bets, or a combination of both. In 133 Asian Racing Federation Council on Anti-Illegal Betting and
the case of a complete white-label solution, a large proportion of Related Financial Crime, The State of Illegal Betting, 2022.
turnover is funneled upstream from operators to the supplier or 134 Ibid.
franchiser. 135 Consultations with regional law enforcement and financial
intelligence authorities, 2023.
47
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Table 1. Recent enforcement action against online 2021 (Netherlands) The Dutch Gaming Authority
casino operators outside of East and Southeast Asia Unauthorized online (KSA) imposed a €440,000 fine on
gambling140 Curaçao-based company Raging
Date and location Breaches and fines Rhino, which offered gambling
to Dutch players through their
2023 (various William Hill issued £19.2 million website, advertising in Dutch
jurisdictions in UK) fine, the largest ever penalty language and using popular local
Social responsibility issued by the British regulator, for payment platform iDeal to conduct
and anti-money “widespread and alarming” social its unlicensed online gambling
laundering failures136 responsibility and anti-money business.
laundering failures.
2022 (Isle of Man, UK) LC International Ltd., which runs
Rise of ‘points running’ syndicates, ‘motorcades’,
Social responsibility 13 websites fined £14 million
and anti-money for social responsibility and anti- and cryptocurrency
laundering failures137 money laundering failures at its
online and land-based business A key characteristic of online casino operations
as well as £3 million for failures at are the ever-evolving efforts of operators to hide
its Ladbrokes Betting & Gaming
Ltd. Operation which runs 2,746
flows of illicit funds from authorities. Together with
gambling premises across Britain. enhanced enforcement of capital controls in some
2022 (Jersey, UK) Annexio (Jersey) Limited countries in East and Southeast Asia, recent past
Gambling Commission trading as Affiliate Empire restrictions on cross-border movement of goods
was fined £612,000 for both and people at the onset of the COVID-19 pandemic
Social Responsibility code which largely limited the ability for illicit cash to
contraventions, and breaches of
the license condition put in place
be smuggled across borders and into casinos in
to combat money laundering and East and Southeast Asia, resulting in a need for
terrorist financing. organized crime to innovate in how these funds
2022 (Malta) Anti- Online Amusement Solution could be transferred.
Money Laundering Limited was fined with an
Control Failures138 administrative penalty of €386,567 Authorities in the region have reported a growing
by the Financial Intelligence
Analysis Unit for anti-money
number of methods being used by organized
laundering failures based on a crime to facilitate the movement of illicit funds
site inspection of AML controls, both through and into illegal online gambling
policies and procedures. platforms. Beyond extensive misuse of junkets by
2021 (Malta) – The Malta Gaming Authority ‘high-rollers’, other common modalities include
Tackling illegal issued €2.43 million in penalties online casino websites utilizing vast underground
operators139 between January and June 2021,
(also known as white-glove) money laundering
as part of an effort to ramp
up enforcement in the sector and banking networks such as so-called ‘points
and tackle unlicensed gaming running’ or ‘score running’ (跑分) syndicates or
operators. The gaming regulator ‘water houses’ (水房), money mule ‘motorcade’
issued 11 warnings, 20 notices (車隊) teams, and third- and fourth-party payment
of breach and sanctions and
nine administrative fines. It also
providers, sometimes referred to as running points
suspended two licenses and platforms.141 As of 2020, the Government of China
cancelled seven.
140 Curacau Chronicle, 2021. https://www.curacaochronicle.com/
post/main/dutch-gaming-authority-fines-local-online-gambling-
company/#:~:text=THE%20HAGUE%20%2D%20The%20
Dutch%20Gaming,through%20the%20website%20luckydays.
com.
136 United Kingdom Gambling Commission, 2023. Accessed at:
141 Among the most common modalities today appear to be so-
https://www.gamblingcommission.gov.uk/news/article/william-
called fourth-party payments and running points platforms.
hill-group-businesses-to-pay-record-gbp19-2m-for-failures.
Fourth-party payments are an evolution of third-party payments
137 Isle of Man Today, 2022. Accessed at: https://www.iomtoday.
which, until recently, exploited gaps in transaction reporting
co.im/news/gambling-firm-fined-ps17m-560218.
in popular third-party payment apps, such as WeChat Pay and
138 FIAU Malta, Administrative Measure Publication Notice, January
AliPay. While both platforms have since enhanced reporting
2022 https://fiaumalta.org/wp-content/uploads/2022/01/
of suspected gambling transactions at the request of Chinese
PublicationNotice-20220114.pdf.
authorities, fourth-party payment providers now typically install
139 Jessica Arena, “Gaming Authority issues €2.43 million in fines in
an additional intermediary between bookmaker, bettor, and
the first half of 2020”, Times of Malta, February 2021 https://
third-party payment application in order to circumvent these
timesofmalta.com/articles/view/gaming-authority-issues-234-
measures and further obscure the nature of transactions.
million-in-fines-in-the-first-half-of-last.851114.

48
 Regional Overview

estimated at least 5 million participants in this China, organized crime groups have responded by
underground industry, totaling an estimated US accelerating the integration of cryptocurrencies into
$157 billion in capital outflows from China and have their illegal betting operations, creating significant
attributed it to the rise in illegal online gambling challenges for investigators across East and
and telecommunications fraud.142 Southeast Asia. In recent years, law enforcement
and financial intelligence authorities have reported
• Running points syndicates (跑分): criminals the rapidly growing use of sophisticated, high-speed
in Southeast Asia often use points running money laundering ‘motorcade’ teams specializing
syndicates, sometimes referred to as ‘moving in underground Tether (USDT) cryptocurrency – fiat
ants’, to transfer stolen money between exchanges (卡接回U) across East and Southeast
multiple bank or cryptocurrency exchange Asia. This has also included the mass recruitment of
accounts as well as online casinos to obfuscate mule bank accounts across virtually all jurisdictions
the source and destination of funds. This in the Asia Pacific region which can be purchased
informal and often cross-border money transfer for as low as US $30 according to regional
modality can involve groups of hundreds and authorities.145
sometimes thousands of individuals and has
grown incredibly popular among youth due to • Money mule ‘motorcades’ (車隊) and the
underemployment in East and Southeast Asia underground USDT – fiat exchange (卡接回U):
who will provide their bank account(s) for use these keywords can be found on many major
by points running syndicates for the purpose platforms where criminals advertise ‘services’
of account pass-through activities143 (collecting for one another, including Facebook, Tiktok,
and transferring funds of an unknown origin) in and Telegram groups where advertisements for
exchange for a commission. These systems are motorcade formation are listed. Motorcades are
frequently used to collect money for criminal an extension of points running syndicates who
activities such as traditional predicate offences offer sophisticated layering schemes by routing
such as drug trafficking as well as cyberfraud money through multiple bank or cryptocurrency
and illegal gambling. Running points has been exchange accounts for a percentage of the
largely used to facilitate illegal online gambling total laundered and transferred funds. Those
to facilitate another layer of money laundering individuals at the ‘front of the car’ who bear
in which funds are routed through online the most risk of detection have been seen
gambling platforms and subsequently ‘white- advertising commission fees of between 20 to
washed’ by cashing in and cashing out through 40 per cent online.146 UNODC has also observed
the platform to justify the source of funds as a common practice of large motorcade teams
casino winnings. This strategy is commonly working with others when processing very large
mixed with transaction miscoding to obfuscate contracts in order to improve concealment and
use of the casino platform and depends on effectiveness. According to conversations with
third- and fourth-party payment providers to authorities in the region, smaller online casinos
help obscure the nature of transactions. are used down the money laundering chain
by organized crime groups and illegal betting
As third- and fourth-party payments have become syndicates to further ‘white-wash’ funds.
better understood by authorities and more widely
reported following ‘Operation Chain Break’144 in Due to the rise of cryptocurrency-integrated
motorcades and points running syndicates, in 2021
142 Anhui Provincial People’s Government, Press conference for
crackdown on cross-border gambling operations, April 2021.
the Government of China banned cryptocurrency
Available at https://www.ah.gov.cn/zmhd/xwfbhx/553972891. transactions, trading, and mining. The industry
html. subsequently migrated to several jurisdictions
143 This presents an increased ML/TF risk as transactions passing
through multiple accounts and/or jurisdictions increase the
globally, driving up already rising cryptocurrency
difficulty for reporting entities and law enforcement to trace adoption in several countries Southeast Asia
illicit funds. in recent years.147 At the same time, it is worth
144 In response to large-scale underground banking utilizing third-
and fourth-party payment platforms and the casino industry, the noting that while leading blockchain analytics
Chinese government initiated ‘Operation Chain Break’ in 2019
and has intensified its effort in subsequent years. The country’s 145 Meetings with regional law enforcement and financial
efforts to try to disrupt the flow of money from mainland China intelligence officials, 2023.
and Macau SAR to countries in Southeast Asia has included an 146 Ibid.
August 2020 ‘blacklist’ of casino destinations. For more details 147 UNODC, Internal Threat Assessment on Casinos, Money
see below box story on the operation. Laundering, and Transnational Organized Crime, 2022.
49
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Figure 14. Simplified running points model for facilitating online gambling and money laundering

‘Gambled’ funds (cash) sent

Fund transfer (cash) via several direct deposits
‘Gambled’ funds and/or miscoded transaction
(i.e. to apparel company)
‘Gambler 1’ in Third and fourth-party
jurisdiction A Commission fee
Running points payment platforms
syndicate-controlled
bank accounts

Online gambling platform /

related bank accounts in
offshore jurisdiction

Funds are disbursed to

an account controlled by Commission fee
gambler 1 in jurisdiction B ‘Gambler 1’ withdraws
from the platform
Third and fourth-party Fund transfer (cash)
payment platforms Running points
syndicate-controlled
bank accounts

Source: Elaboration based on information published by law enforcement and financial intelligence authorities in China.

firms suggest that less than 1 per cent of all the money laundering process is often absent.
cryptocurrency payments are illicit,148,149 in 2023 • It only takes a few seconds to create an account
the Association of Certified Anti-Money Laundering (address) and this is free of cost.
Specialists (ACAMS) published an article arguing • It is possible to create a large money laundering
that cryptocurrency flows connected to organized scheme with thousands of transfers at a low
crime are vastly underestimated.150 Experts have cost and to execute it using automation.
cited a number of shortcomings related to existing • While stablecoins such as USDT remain the
analyses including massive gaps in crime attribution cryptocurrency of choice of organized crime in
on the blockchain, confirmed cases of fabricated East and Southeast Asia, it can be easy to justify
reporting by crypto exchanges, and wash trading unexpected wealth through rapid increases
which inflates crypto transaction volumes, thereby in exchange rates of other virtual assets that
shrinking the portion of illicit transactions identified. exhibit exponential growth.
This suggestion has been echoed by authorities in
the region who have reported major challenges Online gambling platforms and e-junkets have
in blockchain investigation capacity alongside emerged as among the most popular vehicles
rapidly growing use of high-risk and underground for cryptocurrency-based money launderers
cryptocurrency exchanges by organized crime, while also fueling the intensification of Southeast
although successful law enforcement action Asia’s rapidly growing illicit digital economy, and
remains very limited.151 particularly the regional cyberfraud152 industry
(see below). Using this method, funds are paid
Money laundering using cryptocurrencies follows into an online gambling platform or an affiliate
the general pattern of placement-layering- agent who arranges the transfer of in-game points
integration but with some specific features: online through some combination of identifiable or
anonymous accounts. They are either cashed out
• Cryptocurrencies are anonymous at their point or placed in bets, often in collusion with affiliates.
of creation therefore the placement stage of Once the money in the gambling account is paid
148 Chainalysis, Crypto Crime Report 2023.
out, it can effectively be given legal status and
149 TRM Labs, Illicit Crypto Ecosystem Report, 2023. integrated into the formal financial system and
150 Association of Certified Anti-Money Laundering Specialists,
2023. Accessed at: https://www.moneylaundering.com/news/ 152 Concerningly, the vast majority of cyberfraud related
cryptocurrency-research-firms-vastly-underestimate-illicit- cryptocurrency transactions are understood by regional law
payments-critics-claim/. enforcement and financial intelligence agencies as well as
151 Meetings with regional law enforcement and financial industry experts to be withdrawn using major licensed exchanges.
intelligence officials, 2023.
50
 Regional Overview

Figure 15. Simplified USDT-based running points model economy. This growing money laundering method
for facilitating online gambling and money laundering has been specified by the Financial Action Task
Force (FATF) which has identified two situations in
which online gambling platforms can be considered
as a red flag: 1) funds deposited or withdrawn
from a virtual asset address or wallet, with direct
Online gambling platform / related bank accounts and indirect exposure links to known suspicious
sources, including questionable gambling sites;
Gambled funds (cash)
and 2) virtual asset transactions originating from or
destined to online gambling services.153

Online casino Third and fourth-party Proliferation of USDT-based money laundering

agent payment platform
networks
Fund transfer (cash)

USDT, or Tether, is a popular stablecoin – a

USDT top-up
code (QR) issued cryptocurrency pegged to and backed by fiat
by agent Commission fee currencies like the U.S. dollar – which is reported as
having the most liquid markets with an estimated
US $20 billion daily trading volume at the time of
writing.154 USDT on the TRON155 blockchain has
become a preferred choice for regional cyberfraud
Gambler
Gambled funds (USDT)
Running points
operations and money launderers alike due to its
syndicate stability and the ease, anonymity, and low fees of
Source: Elaboration based on information published by law its Transactions.156 Between September 2022 and
enforcement and financial intelligence authorities in China.
September 2023, a recent fund audit of USDT-
Figure 16. Simplified USDT to fiat ‘motorcade’ model
based transactions by one independent blockchain
for facilitating money laundering and underground data analysis company found transactions totaling
banking 17.07 billion USDT connected to underground
currency exchanges, illegal commodity trades,
unlawful collection and payment processes, and
various criminal activities.157 Law enforcement
Transnational crime
group(s) Commission fee and financial intelligence authorities in East and
‘Black’ USDT Southeast Asia have also reported USDT among the
transfer
most popular cryptocurrencies used by organized
Motorcade team(s) crime groups, demonstrated by a surging volume of
cyberfraud, money laundering, and underground
banking-related cases.158,159
Underground
multi-currency
exchange 153 Financial Action Task Force. Virtual Assets Red Flag of Money
Laundering and Terrorist Financing, 2020. Accessed at: https://
www.fatf-gafi.org/content/dam/fatf-gafi/reports/Virtual-Assets-
Underground Red-Flag-Indicators.pdf.
multi-currency
154 Coin Market Cap USDT analysis, 2023. Accessed at: https://
exchange
coinmarketcap.com/currencies/tether/.
155 As of June 2023, TRON had over 165.5 million total user accounts,
more than 5.81 billion total transactions, and over US $11.79
billion in total value locked (TVL), hosting the largest circulating
Motorcade team(s) Clean and illicit cash transfer
supply of Tether (USDT) globally since April 2021.
156 Tether issues tokens on Bitcoin (Omni and Liquid Protocol),
Ethereum, EOS, Tron, Algorand, SLP and OMG Network
Commission fee
blockchains, making it easy to convert and ultimately more
Transnational crime usable.
group(s) 157 Bitrace Fund Audit, November 2023.
Note: Motorcades may also include fiat to fiat exchanges and other 158 Meetings with regional law enforcement and financial
means of informal value transfer. They also regularly utilize online intelligence officials, 2023.
casinos in order to commingle proceeds of crime with recreational 159 Through ongoing analysis of case information and blockchain
gambling flows. data, UNODC has observed several examples of regional money
Source: Elaboration based on information published by law laundering and underground banking networks being shared
enforcement and financial intelligence authorities in China. between Mekong-based cyberfraud operations, drug traffickers,
and more sophisticated cyber threat actors including the Lazarus
Group.
51
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Operation Chain Break

In an effort to combat the estimated RMB 1 trillion (US $157 billion)160 in annual criminal proceed
outflows from China tied to illegal cross-border gambling and related money transfer schemes facilitated
by an estimated five to six million participants, in 2019 the Government of China launched a three-year
campaign, codenamed ‘Operation Chain Break’. While other anti-illegal betting crackdowns have taken
place across China and the wider East and Southeast Asia region in recent years, ‘Operation Chain Break’
was broader in nature and scope than anything ever executed before. The campaign involved agencies
including the People’s Bank of China (PBOC), Central Cyberspace Office, and Ministries of Public Security,
Tourism and Culture, and Finance, among others, which, together with local authorities in countries
including Cambodia and the Philippines, as well as Macau SAR, intensified law enforcement action and
regulatory pressures on casinos and junkets operating offshore.

In an effort to curb associated criminality including money laundering and kidnapping and reinforce capital
controls, in 2019 authorities in China established a so-called ‘blacklist’ system to identify, designate,
and investigate high-risk cross-border gambling tourist destinations, including specific casinos, junkets,
underground banks, and especially online betting websites.161 In tracing illicit financial flows into online
gambling platforms, the PBOC cited several methods leveraged by organized crime to facilitate illegal
cross-border gambling including running points syndicates, misuse of third and fourth-party payment
platforms, licensed and unlicensed remittance service providers, and the use of cryptocurrency.

In connection with the operation, the PBOC publicly reported details of several associated ‘funding chain’
cases, highlighting the success and scale of the operation. For instance, in October 2020, the PBOC’s
Huizhou City branch dismantled a USDT-based cross-border online gambling operation, culminating in
authorities arresting 77 suspects, shutting down three online gambling platforms, and recovering RMB
120 million (US $18.8 million).162 In another case in April 2020, the Zhuhai Public Security Bureau of
Guangdong uncovered an illegal online gambling business operated by a technology company presenting
itself as a software developer. Authorities reported that the company was in fact a white-label service
provider offering technical support and maintenance to at least 45 overseas operators in Southeast Asia,
including in Thailand and Cambodia, with the company collecting over RMB 45 million (US $7 million)163
in service fees.164 The case was one of several related to a broader investigation in which authorities
ultimately arrested four suspected organizers in Macau SAR in December 2020 who had attempted to
cover up the sophisticated network of online casinos, including those impersonating licensed Macau
gaming operators by masquerading as several technology and advertising companies in Macau SAR and
Zhuhai, China.165
160 161 162 163 164 165

160 Anhui Provincial People’s Government, Press conference for For instance, in 2022, police in China announced
crackdown on cross-border gambling operations, April 2021. the results of a major law enforcement operation
Available at https://www.ah.gov.cn/zmhd/xwfbhx/553972891. resulting in the dismantlement of a US $1.7 billion
html.
161 The State Council of the People’s Republic of China, official USDT-based money laundering network coordinated
announcement, The Ministry of Culture and Tourism takes by the Horqin branch of the Tongliao Public Security
the lead in establishing a “blacklist” system for cross-border
gambling tourism destinations. Available at http://www.gov.cn/
Bureau in northeastern China.166 Authorities
xinwen/2020-08/27/content_5537828.htm. dispatched more than 200 officers across 17
162 Coingeek, China cracks down on extensive Tether-linked money provinces and municipalities, arresting 63 suspects
laundering, 27 October 2020. Available at: https://coingeek.
com/china-cracks-down-on-extensive-tether-linked-money- and seizing US $18 million in cash. The network
laundering/. was brought down over the course of the three-
163 Ibid. month operation, with the syndicate found to use
164 Asian Racing Federation, A Report of Blockchain and
Cryptocurrencies in Illegal Betting, May 2021. USDT to launder illicit proceeds derived from illegal
165 Inside Asian gaming, Macau’s Judiciary Police arrests four gambling and other crimes for domestic and foreign
over widespread “family style” online gambling operation, 14
December 2020. Available at: https://www.asgam.com/index.
criminal groups. Authorities also reported that the
php/2020/12/14/macaus-judiciarypolice-arrests-four-over- gang had recruited individuals to participate in the
widespread-family-style-online-gambling-operation/. money laundering network and register accounts
166 Ministry of Public Security of China, 2022. Accessed at: https://
mp.weixin.qq.com/s/JO3lpwKXj66ef0wf9qo3vw.
52
 Regional Overview

with crypto exchanges through Telegram to facilitate hopping172 using several cryptocurrencies.173
pass-through activities.167 The syndicate was further
described to have a clear division of labor, with its
operations stretching across China, with authorities
notably reporting that two ringleaders had fled to
Bangkok, Thailand prior to arrest, but eventually
returned to China.168

Seized assets and bulk-cash reported during the Singapore raid.

Source: Singapore Police Force, 2023.

In August 2023, authorities in Singapore announced

the city-state’s largest ever money laundering
Bulk cash seizure made during operation by Chinese police. Source:
investigation, culminating in the arrest of 10 foreign
Ministry of Public Security, 2022.
nationals suspected of laundering the proceeds
of overseas organized crime activities including
In a similar investigation between December 2021
online gambling and telecommunication scams.174
and July 2022, authorities in China dismantled a
Singapore police conducted a series of sweeping
separate cryptocurrency-based ‘points running’
raids across the city-state consisting of more
network that laundered a total of US $5.6 billion
than 400 officers following analysis of suspicious
for criminal groups involved in telecommunication
transaction reports, seizing a total of US $737 million
scams and illegal gambling. Police arrested a total
in cash and USDT, real estate, luxury cars, other
of 93 suspects across Hainan, Guangdong, Fujian,
assets including over 250 luxury handbags, jewelry,
and Gianxi in connection to the case.169
and watches, as well as various electronic devices
and virtual asset seed phrases.175 Authorities also
More recently, in November 2023 an investigation
noted that the suspects were in possession of a
led by the United States Department of Justice in
range of various passports from countries including
collaboration with cryptocurrency exchange OKX
China, Turkey, Cyprus, Cambodia, and Vanuatu,
and Tether led to the voluntary freezing of US $225
and had forged documents in order to substantiate
million in USDT connected to a Southeast Asia-based
the source of funds in Singapore bank accounts.176
human trafficking and pig butchering170 cyberfraud
Additionally, nine of the ten suspects arrested
ring.171 In connection to the investigation, the
appear to have been naturalized Cambodian citizens
Department of Justice also seized nearly US $9
according to records published by Royal Decree in
million in USDT, with investigators tracing victim
Cambodia,177 with several previously investigated
deposits that were laundered through chain-

172 Chain-hopping represents one of the fastest-growing money

laundering typologies, involving the transfer of virtual assets
from one blockchain to another, often in rapid succession, to
impede the tracing of funds and make detection of illicit activity
by exchanges more difficult.
167 Ibid.
173 United States Department of Justice, Press Release. November
168 Ibid.
2023. Accessed at: https://www.justice.gov/opa/pr/cyber-scam-
169 Ministry of Public Security of China, 2022. Accessed at: https://
organization-disrupted-through-seizure-nearly-9m-crypto.
mp.weixin.qq.com/s/1EHyqkKRd5HxPYXSaj19rg.
174 Singapore Police Force, 2023.
170 The pig butchering scam is a type of scam in which criminals lure
175 A seed phrase is a series of 12 or 24 random words that provides
victims into digital relationships to build trust before convincing
the data needed to recover a lost or broken crypto wallet. It is
them to invest in cryptocurrency using fraudulent cryptocurrency
also known as a mnemonic phrase and is best understood as a
platforms.
security measure for self-custodied digital assets.
171 Tether Operations Limited, November 2023. Accessed at:
176 Singapore Police Force, 2023.
https://tether.to/en/following-investigations-by-tether-okx-and-
177 UNODC analysis of criminal and citizenship records in China and
the-us-department-of-justice-tether-voluntarily-freezes-225m-
Cambodia, 2023.
in-stolen-usdt-linked-to-international-crime-syndicate/.

53
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

in China for related criminal activities.178 Singapore

authorities also brought additional charges
relating to possession of criminal benefits from
an unlicensed moneylending business in China as
well as illegal online gambling operations in the
Philippines against three of the ten suspects in the
week following the operation, while at least one
suspect is further alleged to have been involved
in operating illegal gambling websites in Myanmar
using USDT.179

Convergence between online gambling,

cyberfraud, and human trafficking

In recent years, a growing number of organized

crime groups have established extensive criminal
cyberfraud operations in several countries in Malicious cryptocurrency trading application development
Southeast Asia, with an estimated more than advertisement targeting scam bosses ‘based in major parks and special
zones’ stealing USDT cryptocurrency.
220,000 people being held in situations where
they are forced to carry out various cyberfraud and
scam activities in Cambodia and Myanmar alone.180 These groups have taken advantage of the sprawling
Together with enhanced law enforcement and casino industry as well as SEZ infrastructure,
regulatory pressures on the regional online casino advances in information technology and web
industry, this development follows severe mobility design, and rising youth unemployment present in
restrictions in the wake of the COVID-19 pandemic the region to set up sophisticated operations, using
in which criminal groups were forced to innovate, these venues as a legitimizing cover for their criminal
digitize, and diversify their business model in order activities. They lure labourers into trafficking using
to maintain revenues having invested hundreds promise of lucrative employment and increasingly
of billions of dollars into the region’s expanding professionalized recruitment schemes, often using
casino industry. More specifically, both land-based social media platforms such as Telegram, WeChat,
and online operators have moved their bases TikTok, and Facebook. At the same time, victims
of operation into loosely regulated and highly of cyberfraud are targeted using data bought and
vulnerable jurisdictions including Cambodia, Lao sold on various dark web and clear web platforms
PDR, the Philippines, and several border areas and lured to invest into professionally designed
controlled by armed groups in Myanmar, in turn fraudulent investment platforms and increasingly
expanding their business lines into cyberfraud. fraudulent international banking applications.
Others have moved operations outside Asia There are also growing signs of influence over
including to Dubai, Africa, Eastern Europe, and local officials, as well as infiltration of key areas of
the Pacific, and have also attempted to legitimize the formal economy including money and virtual
operations by investing into offshore licensed but asset service providers, property developers,
underregulated gambling companies.181 dealers in precious metals and precious stones,
legal professionals and accountants, and trust and
company service providers.

Underpinning and accelerating this fast-evolving

and exploitative illicit digital industry, however,
are the advances which have taken place in
online gambling and related money laundering
178 Boshan Branch of the Zibo Public Security Bureau, 2022. and underground banking systems in the region.
179 Ibid. Fundamentally, the dramatic growth and scale of
180 United Nations Human Rights Office of the High Commissioner,
Online Scam Operations and Trafficking into Forced Criminality in
the industry, demonstrated by rapid developments
Southeast Asia, 2023. in new cyberfraud compound construction across
181 Asian Racing Federation, 2023.

54
 Regional Overview

the region, have required parallel developments Several cases across a number of countries
in underground banking and money laundering demonstrate the growing convergence between
capabilities, with mounting evidence pointing to online gambling, cyberfraud, and human trafficking.
casinos. The relationship between these various For instance, in recent months authorities in
illicit industries and others, such as the region’s the Philippines have conducted a series of raids
highly lucrative synthetic drug trade,182 has proven across the country targeting cyberfraud operations
symbiotic, enabling the broader illicit economy to embedded within licensed offshore gambling
reach new heights. companies. Victims across three large and highly
securitized compounds were largely found to have
In one Mekong country alone, estimates suggest that been lured into the country illegally and forced
the cyberfraud industry generates approximately to work between 16 to 18 hours per day, often
US $300 to $400 per day per worker, through lacking food, and with pay withheld for failing to
approximately 500,000 workers,183 however, other meet targets. Trafficked labourers were forced to
sources estimated the number to be between engage in online game manipulation, investment
80,000 and 100,000.184 With that said, even the scams and fraud, and romantic relationships with
lower estimates would yield between US $7.5 and victim-targets from countries including Canada, the
US $12.5 billion in raw earnings;185 this compared United States, and others in Europe and Asia.
to the country’s GDP of just under US $27 billion
in 2021.186 In recent months, tens of thousands Table 2. POGO raids between May – August 2023
of cyberfraud labourers have also been identified
and/or rescued in Lao PDR, Myanmar, and the Operator Date and Number of Licensed
Philippines following appeals from governments name location labourers189 POGO
status
and crackdowns against offshore casino operators,
Xinchuang 26 June – Hong 2,812 Licensed
cyberfraud compounds, and organized crime
Network Tai Compound, POGO
groups. In Cambodia alone, the Government of Technology Las Pinas City
Indonesia reported repatriating +1,100 Indonesian SA Rivendell 2 August – 650 Licensed
nationals who fell victim to human trafficking Global Pasay City POGO
and were employed by cyberfraud companies in Support customer
2023,187 however data for the purpose of broader relations
service
regional estimates remains limited. It is also
provider
worth noting that in 2022, the Federal Bureau of
CGC 4 May– Clark 1,090 Licensed
Investigation announced that victims had reported Technologies Freeport Zone POGO and
totaling US $3.3 billion from pig butchering, more and Colorful licensed
than double the reported losses in 2021, with most and Leap POGO
that cases that have been unsealed and successfully Group service
geographically attributed linking back to cyberfraud Company Provider
Source: Philippine National Police and PAGCOR, 2023.
operations based in the Mekong region.188
The series of sweeping raids reveal several major
issues within the Philippine offshore gambling
182 UNODC Synthetic Drugs in East and Southeast Asia, 2023. operator (POGO) model relating to regulatory
Accessed at: https://www.unodc.org/roseap/2023/06/regional- enforcement challenges including unauthorized
synthetic-drugs-report-launch/story.html#:~:text=Released%20
today%2C%20the%20report%2C%20%E2%80%9C,trafficking%20
routes%20have%20shifted%20significantly.
183 UNODC, Internal Analysis on Illicit Financial Flows in the Mekong,
2023.
184 Ibid.
185 This is based on an assumption of 6-day work week, with 80,000
people at $300 per person or 100,000 people at $400 per person.
186 The World Bank, “GDP (current US$)”, 2021. Available at: https://
data.worldbank.org/indicator. 189 While the vast majority of labourers identified on site during the
187 Ministry of Foreign Affairs of the Republic of Indonesia, official raids were victims of trafficking for forced criminality, several
press conference, January 2024. individuals found in the raid of SA Rivendell Global Support were
188 Federal Bureau of Investigation, Internet Crime Report, determined by authorities to be complicit in the operations,
2022. https://www.ic3.gov/Media/PDF/AnnualReport/2022_ with some having previously been rescued from cyberfraud
IC3Report.pdf. compounds in Myanmar by Philippine authorities.

55
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Map 3. Locations of known or reported compounds and related special zones in Cambodia, Lao PDR, and Myanmar,
2023

Laukkaing, Kokang, SR1, Myanmar China

!
!!

Wa State
!!
!! !
!!!!
!

!!
!!!! !

Viet Nam
!
!!!!

Myanmar
!!! !!!
!!!
!!!!

Mongla, SR4, Myanmar

Tachileik
!!
!!! !
!!
Bokeo

Lao PDR

!!
!!
!!
!
!!
!!
!
! ! !!

Myawaddy and Shwe Kokko, Myanmar

!!
!! Thailand

Poipet
!!!

Cambodia
Kandal
!

Pursat !

!
! ! !
Koh Kong !!!!!
!
!!!!!
! !

Sihanoukville
! Known or reported cyberfraud
compounds and related special Bavet
zones in Cambodia, Lao PDR,
and Myanmar

Note: The present map depicts locations of known or reported cyberfraud compounds and related special zones in Cambodia, Lao PDR, and
Myanmar as reported by regional law enforcement authorities and may be subject to change given the evolving situation an ongoing law
enforcement operations.

56
 Regional Overview

Figure 17. Hierarchy of offenders in trafficking for forced criminality

Source: UNODC Policy Brief on Casinos, Cyberfraud and Trafficking in Persons for Forced Criminality, 2022.

sublicensing,190 inspection and supervision from China and three from Taiwan PoC who had
failures,191 and the infiltration of organized crime. allegedly worked in a fraud syndicate based within
the Hong Tai online gaming compound which was
In addition to the abovementioned criminal used as a front to throw off authorities. According
activities, authorities identified several fugitives on to information shared by the Ministry of Public
site at the Hong Tai Compound in Las Pinas during Security of China, the individuals were wanted on
the raid on Xinchuang Network Technology. More detention warrants issued against them for criminal
specifically, Philippine police arrested four nationals activities including contract fraud, drug trafficking,
telecommunications fraud, and theft.192 It is also
190 Philippine casino regulator PAGCOR has acknowledged the
common practice of sublicensing by ‘master license holders’
worth noting that examination of another of the
exploiting regulatory enforcement gaps relating to activities raided companies, SV Rivendell Global Support,
carried out by licensed service providers. In effect, licensed using opensource IP abuse reporting database,
service providers would conduct unauthorized operations
beyond their license including online gambling and cyberfraud, AbuseIPDB, reveals nine malicious activity reports
and other cybercrime activities, using their ‘sublicense’ for legal, relating to various cyberattacks carried out by an
regulatory, and fiscal cover. At the time of writing, PAGCOR has IP address located in the Philippines and attributed
issued a freeze on all new licenses and implemented a new
licensing scheme which reduces the number of service providers to a company with the same name.193 The reports
per ‘master license holder’ from 10 to 2, while placing all POGOs were submitted from endpoints in Canada, the
on a one-year probationary license until they are found compliant
with new licensing and beneficial ownership requirements.
United States, the United Kingdom, Malaysia, and
191 PAGCOR has also indicated significant difficulties in enforcing
regulations and conducting inspections in licensed land-based 192 Philippine Bureau of Immigration, press release, 2023.
casinos, VIP rooms, and offshore operators stemming who are 193 AbuseIPDB. Accessed at: https://www.abuseipdb.com/
regularly uncooperative and noncompliant with the regulator. check/58.71.82.247.

57
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Image of Hong Tai compound and related press release. Source: Philippine Police and Philippine Immigration Bureau, 2023.

Viet Nam. Concerningly, SV Rivendell was inspected fraud and money laundering.197 The group, which
by the Philippine casino regulator just days before targeted would-be gold investors using the Thai
the raid according to authorities.194 Crown Property Bureau to promise returns of 10 per
cent or more, generated more than US $15 million
Similar to earlier casino and cyberfraud compound in a five-month period, converting the proceeds
displacements driven by law enforcement and into USDT cryptocurrency using underground
regulatory pressures in Southeast Asia,195 the exchangers and Thai money mule accounts
ongoing crackdown in the Philippines is likely which were hired for between US $90 to $120.198
to have a profound impact on other vulnerable According to authorities, those charged had moved
countries in the region. This strategy of jurisdiction operations from Sihanoukville, Cambodia to the
shopping has proven common among high-level Golden Triangle SEZ following a law enforcement
cyberfraud operators relocating deeper into crackdown in September 2022, with the leader also
the most vulnerable parts of the Mekong, and making several trips to the Philippines, Tachileik
particularly armed group-controlled territories of and Myawaddy, Myanmar, and the UAE.199
northeastern Myanmar including Kokang SR 1, Wa
SR 2, Mongla SR 4, as well as Tachileik and areas in Growing indication of generative AI use, deepfake
and around the Golden Triangle SEZ in Lao PDR. fraud, and other malicious technology

There is already strong indication of new, large- Increasingly sophisticated AI-powered chatbots
scale cyberfraud compounds and expansions of and deepfake200 technology risk becoming a
existing infrastructure being constructed in many favoured tool for criminals engaged in cyberfraud.
of these areas, with regional law enforcement In addition to the threat of accelerating the
reporting a growing number of cases attributed automation capabilities of cyberfraud operations
to them.196 For instance, in July 2023, authorities based in Southeast Asia, and particularly the
in Bangkok, Thailand arrested a group of 11 mixed Mekong region, there is growing indication of
Chinese, Thai, and Myanmar nationals, including
197 Consultations with regional law enforcement and financial
the leader of a scam syndicate operating from a intelligence officials, 2023.
compound inside the Golden Triangle SEZ in Bokeo, 198 Ibid.
Lao PDR on charges related to telecommunications 199 Ibid.
200 Deepfakes are synthetic media that have been digitally
manipulated to replace one person’s likeness convincingly with
194 Meetings with national law enforcement and regulatory that of another through the manipulation of facial appearance
authorities, 2023. via deep generative methods. While the act of creating fake
195 UNODC, Internal Threat Assessment on Casinos, Money content is not new, deepfakes leverage powerful techniques
Laundering, and Transnational Organized Crime, 2022. from machine learning and artificial intelligence to manipulate or
196 Meetings with regional law enforcement and non-governmental generate visual and audio content that can more easily deceive
organizations, 2023. the viewer.

58
 Regional Overview

Screenshot of ‘face-swapping’ product advertisements found within Telegram ‘grey and black market’ groups, 2023.

deepfake fraud being deployed to both perpetrate Advances in deepfake technology have given
scams and bank fraud to bypass KYC measures. This rise to more sophisticated and damaging
poses a significant threat to individuals as well as cyberfraud schemes.202 By using AI to create
the formal banking industry, leading regulators, law computer-generated images and voices that
enforcement agencies, and financial institutions are virtually indistinguishable from real ones,
to take urgent action to protect consumers and fraudsters can execute social engineering scams
financial integrity. with alarming success rates, exploiting people’s
trust and emotions. Among others, this includes
While available data is limited, a recent independent sophisticated investment fraud and financial
identity fraud study noted a 1,530 per cent increase grooming including, ‘pig butchering’ and,
in deepfake incidents in the Asia Pacific region increasingly, task scams,203 sextortion, and schemes
between 2022 and 2023, representing the second- impersonating law enforcement officers and other
highest region by incidents.201 Among the key government officials. Criminals also exploit stolen
findings, the report noted Indonesia, Hong Kong, personal data from various sources including the
and Cambodia having witnessed a more than two- dark web and so-called ‘grey and black market’
fold increase in identity fraud percentages over Telegram groups, using data mined social media
the past two years, noting cryptocurrency industry
202 Bloomberg Business, 2023. Accessed at: https://www.bloomberg.
as the main target for AI-driven deepfake fraud, com/news/articles/2023-08-21/money-scams-deepfakes-ai-will-
representing 88 per cent of all deepfake cases drive-10-trillion-in-financial-fraud-and-crime?srnd=markets-vp.
detected in 2023, while Viet Nam and Japan ranked 203 Task scams involve the online recruitment of victims for what
appears to be a remote work scheme. Victims are ordered to
the highest for the prevalence of deepfake fraud in carry out various online tasks including content engagement
the same year. (liking social media posts, leaving automated reviews, etc.)
in exchange for commission, however ‘earning’ more money
201 Sumsub Identity Verification Service, Identity Fraud Report 2023. requires layers of ‘investment’ into the tiered operation via
Accessed at: https://sumsub.com/fraud-report-2023/?utm_ cryptocurrency which is subsequently stolen.
source=pr&utm_medium=article&utm_campaign=fraud_
report2023
59
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

profile information and photos, among other users.209 While mass adoption has not yet occurred,
information, to create fake identities and ‘masks’ research shows that the metaverse has the potential
that can bypass facial recognition systems and to generate up to US $5 trillion in value by 2030,210
KYC measures, adding to challenges related to making it an opportunity too big to ignore and
money-muling, money laundering, and high-risk likely to attract many new participants including
and underground banking. It is worth noting innovative, opportunistic, and increasingly high-
that authorities in the region have also reported tech organized crime groups.
indication of cyberfraud operations based in
Southeast Asia rapidly diversifying their business Due to the decentralized nature of the metaverse,
model by expanding into the development of challenges with identity and verification, tracing
malicious mobile and web applications or malware, the origins of virtual assets, complicated legal
the broader blockchain gaming industry, online issues, technological advancements, and a lack
bank fraud schemes, underground cryptocurrency of uniform legislation, the metaverse presents
exchange and payment services, and offering a numerous AML compliance concerns and risks. For
broad range of cybercrimes as a service.204 instance, with no intermediary such as banks, the
Metaverse runs on a decentralized paradigm where
Several reports of related cyberfraud incidents have users deal with one another directly. Due to the lack
been reported in countries including Canada, China, of a central organization in charge of monitoring and
India, the Philippines, Thailand, Viet Nam, and regulating transactions, this decentralized nature
the United States in recent months. In April 2023, makes it difficult to apply AML requirements.
Fuzou police and Chinese state media reported the
first such incident in which an individual reported As the metaverse gains popularity and grows in
that he had received a WeChat video call from a scale, it will become increasingly challenging to
close friend and remitted US $590,000 to the other ensure that in-game metaverse transactions abide
party’s account within 10 minutes.205 The victim by AML rules and criteria without a centralized
reported the incident to local police who were able authority. Moreover, AML compliance mechanisms
to freeze most of the funds in cooperation with within the metaverse are also difficult to monitor
counterparts in inner Mongolia where the recipient and enforce as a result of the lack of centralized
bank account was opened. That same month, police authority. Unlike banks and other financial
in Anhui province of eastern China also detained institutions and organizations which serve as the
scammers who tricked a man into transferring a gatekeepers for conventional financial systems
large, undisclosed amount of money to a supposed and regulatory regimes, participants in the
friend using AI face-swapping and voice-synthesis decentralized metaverse are solely accountable for
technology.206 While limited information has been adhering to and enforcing AML policies as well as
reported by authorities elsewhere in the region, reporting suspicious activity. It is also worth noting
law enforcement officials have indicated they are that participants in the metaverse frequently go by
monitoring the situation closely and anticipate aliases or remain anonymous, making it difficult
this new modus operandi to cascade across the to determine their true identity, resulting in
region.207 substantial issues for AML compliance.

Developments and vulnerabilities in the metaverse With respect to jurisdictional complexities and
cross-border transactions, it is important to
According to recent data, the market size of the acknowledge that the metaverse is a worldwide
metaverse208 was US $65.5 billion as of 2022, network. In traditional financial systems, it is
consisting of over 400 million active metaverse already difficult to enforce AML laws across
different countries, and this problem is exacerbated
204 Consultations with regional law enforcement and intelligence
authorities, 2023. by the metaverse’s decentralized and international
205 China Youth Daily, Communist Youth League of China, character, especially for cross-border payments. It
2023. Accessed at: http://zqb.cyol.com/html/2023-06/06/ is also challenging to develop a cohesive approach
nw.D110000zgqnb_20230606_2-05.htm.
206 Ibid.
207 Meetings with international law enforcement and regional 209 Statista Analytics, 2023. Accessed at: https://www.statista.com/
cybercrime authorities, 2023. statistics/1295784/metaverse-market-size/.
208 The metaverse is the emerging 3D-enabled digital space that 210 Mckinsey & Company, 2022. Accessed at: https://www.mckinsey.
uses virtual reality, augmented reality, and other advanced com/featured-insights/mckinsey-explainers/what-is-the-
internet and semiconductor technology to allow people to have metaverse.
lifelike personal and business experiences online.
60
 Regional Overview

Screen capture from Decentraland’s ICE Poker metaverse casino, 2023.

to AML compliance in the metaverse due to the lack fiat nor convertible virtual currency transactions.
of standardized AML legislation and different legal Instead, players can buy, sell, trade, and lend
frameworks across jurisdictions. The metaverse is NFT’s using the platform’s play-to-earn model. As
also a rapidly developing environment distinguished stated within a legal opinion embedded on the
by technological advancement. Financial products company’s landing page, the metaverse casino
and digital asset types are continuously developing, platform “would generally not contravene [local]
frequently exceeding regulatory frameworks and gambling laws [as]… there is no staking or wagering
AML compliance procedures. At the same time, the of money or money’s worth.”211 While the no-stake
regulatory environment in the metaverse is hugely approach of this particular casino may in fact be in
disjointed, with various levels of AML laws and line with local gambling laws and regulations, there
guidelines in various jurisdictions. Businesses are already several other metaverse casinos which
operating within the Metaverse have difficulties empoy a more traditional gambling model in which
as a result of the absence of standardization since players can convert fiat into a number of metaverse
they must traverse a variety of legal obligations and tokens in order to place a wager.
compliance standards.

While the metaverse remains largely in its infancy,

there is growing indication of organized crime
groups targeting business projects related to the
broader online gaming industry, and particularly
blockchain gaming, while several metaverse
casinos have already emerged. For instance, one
major metaverse casino claiming to be registered
in a Southeast Asian country reported generating
cumulative revenue exceeding US $40 million in
the first three months of 2022. At the same time,
the entity demonstrates a unique regulatory
challenge given that it claims to neither enable 211 Official website of the metaverse casino platform, 2023.

61
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

62
Underground Banking and Money
Laundering Methods: Case Studies
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

64
 Alvin Chau Cheok-wa (周焯华) and Suncity junket

Alvin Chau Cheok-wa (周焯华) and Suncity junket

In November 2021, the Wenzhou City Public

Security Bureau issued a warrant for Macau SAR-
based junket mogul Alvin Chau’s arrest, accused of
running a massive illegal online and proxy betting
operation as well as money laundering and leading
an organized crime group. Following on from an
investigation that started in 2019, authorities
would allege that this activity was conducted
through the cover provided by the Suncity junket
and VIP rooms, at the time the world’s biggest
junket operator responsible for as much as 50 per
cent of high-roller gambling turnover in Macau
SAR.1 Chau was convicted in Macau SAR in January
2023 and sentenced to 18 years in prison on over
100 charges relating to facilitating illegal bets
exceeding US $105 billion between March 2013
and March 2021.2,3 Data seized by authorities also
show that between 2015 - 2019, Chau and Suncity
had processed an estimated +300 billion yuan (US
$42 billion) bet by online gamblers in China through
the group’s illegal offshore operations.4

In a related case, the Wenzhou Intermediate

People’s Court also convicted 36 individuals
connected to the Chau-led syndicate, finding that
the group provided cross-border currency exchange
and settlement services and collected gambling
debts through asset management companies
and underground banks it had established on the

1 Asian Racing Federation, 2023.

2 Public Prosecutor’s Office of Macau SAR. Investigation file no.
3472/2020, prosecution charge no: 1345/2022.
3 Acusação do Ministério Público n.º: 1345/2022. Accessed at:
https://www.court.gov.mo/sentence/zh-9f8cd198757f3527.pdf. Source: Arrest Warrant Issued by Wenzhou City Public Security Bureau
4 China Central Television, Government of the People’s Republic of of China, November 2021.
China, January 2024.

65
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

mainland.5 The Court determined that between resources to facilitate underground transactions
2016 and 2021, the Suncity-linked consortium had concealed as legitimate gambling flows. More
expanded to more than 280 mainland Chinese specifically, this included online and proxy betting
shareholder-level agents, more than 38,000 facilitated through Suncity’s regional network of
gambling agents/promoters, and more than 80,000 VIP rooms and associated bank accounts and online
players, totaling at least US $160 million in illegal gambling and phone betting platforms, as well as
cross-border payments and transactions facilitated facilitating informal cross-b­order money transfers
through Suncity’s regional network of VIP rooms disguised as gambling credit issued to VIPs.11 Illegal
and associated online gambling and phone betting transactions were carried out through Suncity VIP
platforms operating within offshore casinos in cash cards, referred to as ‘Operation Reserve Cards’,
jurisdictions including Cambodia, the Philippines, and managed using specialized IT management
and Viet Nam, among others.6 This was further systems referred to as ‘RollsMary’ and ‘SunPeople’
substantiated in Chau’s indictment7 and conviction.8 which recorded client data, betting volumes, credit
issuance and debts, hotel room bookings, and
Suncity is no longer a licensed Macau SAR junket more.12
operator, though various related entities trading
under different names are still believed to be
involved in the casino industry in Russia, the Isle of
Man, the Philippines, and Viet Nam, among others.9

Mechanics

As revealed over the course of the investigation

and trial, Chau was found to have led a side-betting
business named ‘Main Camp’ which enabled large-
scale underground banking, money laundering, and
tax evasion. This was corroborated in testimony from
Suncity executives including a former accounting
director. Main Camp was based on multiplier
betting,10 also known as under-the-table betting
or ‘tok dai’ (托底), and utilized existing Suncity
corporate and technological infrastructure and
5 Wenzhou City Public Security Bureau, 26 November 2021.
6 Ibid.
7 Acusação do Ministério Público n.º: 1345/2022. Accessed at:
https://www.court.gov.mo/sentence/zh-9f8cd198757f3527.pdf.
8 Public Prosecutor’s Office of Macau SAR. Investigation file no. Screenshot of Suncity Group online gambling platform and VIP Reserve
3472/2020, prosecution charge no: 1345/2022. Card. Source: Suncity Group Wechat.
9 Conversations with law enforcement and review of criminal
intelligence documents indicate that Suncity was also active in
Lao PDR and Myanmar, facilitating both illegal gambling and In financing and expanding Suncity’s illegal side-
payment services for organized crime (see map 4 in regional betting business, Chau targeted high-net worth
overview).
10 Multiplier betting refers to a form of ‘under-the-table gambling’ VIP members in various jurisdictions and offered
in which a bet formally denominated at the casino gambling company equity and gaming commissions as
tables only represents only a fraction of the total amount of a
private bet made between gamblers and junket operators to
an incentive to ‘invest’ and provide capital
avoid gaming revenue levies. It allows clients to pre-negotiate and liquidity to the side-betting companies he
their preferred payment method, betting currency, and cash-out controlled, with these customers in turn becoming
method while increasing the commissions received by the junket
promoter, and can be used as a tactic to conceal the total amount agents of Suncity.13 Extensive discussions with law
of money transmitted through the casino by an individual enforcement and financial intelligence officials
bettor and obfuscate the source and destination of funds. Such indicate that Suncity also offered high interest rates
arrangements are understood to have grown in popularity due to
most junket customers in Macau SAR originating from mainland in exchange for storing money with the junket, with
China. These customers do not—and in any case cannot—bring many investors preferring the junket as opposed to
money with them to play due to strict capital controls and a
nation-wide gambling ban in mainland China, and instead rely on
traditional financial institutions. This was due to
credit issued by junket agents. For instance, should a customer
request a HK $1 million credit, the junket agent can request 11 Wenzhou City Public Security Bureau, 26 November 2021.
the casino to provide HK $100,000 worth of chips, with the 12 Public Prosecutor’s Office of Macau SAR. Investigation file no.
understanding between the junket agent and customer that a 3472/2020, prosecution charge no: 1345/2022.
ten times multiplier is in effect. 13 Ibid.
66
 Alvin Chau Cheok-wa (周焯华) and Suncity junket

higher returns, greater flexibility, and virtually no large amounts of value from one jurisdiction into
due diligence and screening, effectively rendering another without moving any hard currency and
it an international bank for criminals that needed with no scrutiny.
to move money globally.14
To reach a broader consumer base, Suncity
In turn, whenever other Suncity VIP members increasingly turned to online gambling and
wished to have (what appeared to be) gambling e-junkets beginning in 2016. Using proprietary
credit issued at one of the junket’s overseas ‘integrated entertainment platforms’ including
operations using the side-betting business, the Easy Bet, Universal e-city, SCM Alliance e-city, and
Suncity exchange rate department would devise SCPP Alliance e-city, in-game points (non-fungible
an offsetting arrangement15 by selecting at random tokens) would be credited onto individual Suncity-
an agent in possession of both a Suncity currency linked online gambling accounts, with gamblers
account and bank account in the desired destination having to ‘recharge’ and ‘buy code’ by converting
and currency where the funds may be disbursed.16 money from their Suncity VIP accounts and doing
The department then requested the agent to help the opposite upon withdrawal. Points could be
conduct an informal money transfer by issuing the exchanged for chips, services, or cashed out in
corresponding amount of credit. The fund recipient various currencies.19 Usernames and passwords
(gambler) at the desired destination would transfer on these platforms would be linked to the client’s
funds to the agent’s preferred account, and the original Suncity VIP account, and Suncity VIP
Suncity currency exchange department would account credit could be obtained using a number
transfer the corresponding funds to the player’s of methods including cash and various assets at the
Suncity account, minus the junket fee (commission). time of collection.
The same process was reversed if funds needed to
be moved from the respective destination country According to the initial indictment, Chau and
and into another jurisdiction, and as many as 100 Suncity associates involved in the Main Camp
calls per day are understood to have been received business had set up a network of front companies in
regarding facilitating such cross-border transfers mainland China including real estate and property
prior to the closure of Suncity junket operations.17 development companies through which to launder
the proceeds of their operation under various
Suncity is also understood to have developed a identities. These assets would ultimately be held
multi-billion-dollar real estate portfolio through and managed by the Suncity asset department.
its payment settlement arrangements which were Other illicit proceeds would be placed, layered,
devised to cover what appeared to be VIP customer and integrated through a sophisticated structure
losses incurred through gambling.18 In effect, involving Suncity VIP room accounts, allowing
clients using this system would be able to bypass related funds to appear as legitimate Suncity
the formal financial system and informally transmit revenues.20 At the same time, utilizing Suncity’s
regional network of VIP rooms and offsetting would
14 Meetings with regional law enforcement and financial intelligence
authorities, 2023. enable billions of dollars in underground cross-
15 As described in the earlier regional section of this report, border payments to be transmitted and effectively
junket-based offsetting arrangements, also referred to as mirror
transactions, are ultimately a means of junket financing in which
laundered into jurisdictions where Suncity had
the gambler deposits money into a junket account or stakes their operations through traditional cash-in cash-out
local assets in one jurisdiction, and in turn may access this credit casino-based money laundering.
(minus a fee) at another. While this model should be limited
to gambling, in practice it has become a favoured typology for
underground banking and money laundering as a system of Confirmed links to organized crime
debits and credits allowing operators to move money quickly
and informally below the radar of tax and law enforcement
agencies. In short, offsetting is used as a means of transferring Australia
value between jurisdictions through a junket-gambler credit
and debit relationship between entities in different countries.
Organizations facilitating offsetting arrange for money debited
In recent years, Alvin Chau, Suncity Group, and
from an entity in one jurisdiction to be credited to (sometimes several other junkets have been the subject of
the same) entity in a second jurisdiction, requiring the facilitator law enforcement and regulatory investigations
to have fund access in both.
16 Public Prosecutor’s Office of Macau SAR. Investigation file no.
and inquiries in Australia in relation to illegal
3472/2020, prosecution charge no: 1345/2022. bookmaking, drug trafficking, and large-scale
17 Acusação do Ministério Público n.º: 1345/2022. https://www.
court.gov.mo/sentence/zh-9f8cd198757f3527.pdf. 19 Ibid.
18 Meetings regional law enforcement and financial intelligence 20 Public Prosecutor’s Office of Macau SAR. Investigation file no.
officials, 2023. 3472/2020, prosecution charge no: 1345/2022.
67
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

2018 CCTV footage showing Suncity staff dealing with large amounts of cash in the junket’s private gaming salon at the Star in what appeared to
be money laundering. Source: Star Casino Independent Review.

money laundering activities taking place at Suncity junket operators, and third parties unrelated to the
VIP rooms in Melbourne, Perth, and Sydney, junket, further substantiating the charges that led
culminating in the 2021 parliamentary inquiry into to his conviction in Macau SAR.
casinos.21 As revealed during the inquiry, several
junkets including Suncity and the Iek Junket22 which Connections between the Suncity junket and
Chau had financed, were noncompliant with both transnational organized crime were further
their junket operator agreements and associated substantiated in an unsealed 2022 Securities and
service desk processes, as well as Australian anti- Investments Commission filing,25 which stated
money laundering laws. This included practices such that Australian federal law enforcement had found
as Suncity staff having operated an unlicensed23 Chau to have received payment into his Star Sydney
cash service desk for both patrons and unknown casino account in cash from an individual who had
individuals being helped to use CCTV blind spots subsequently plead guilty to dealing in proceeds
to avoid security cameras. On numerous occasions, of crime.26 The filing also cites a Suncity report
cash was observed being carried in and out in developed by the Hong Kong Jockey Club, noting
suitcases and backpacks, including by a Suncity Chau’s ‘clear’ association with triad societies,
limousine driver, during an internal Star casino including the 14K triad, and that Australian law
investigation into Suncity’s Salon 95 operation in enforcement had informed the Club that “…during
May 2018, titled ‘Operation Moneybags’.24 Alvin 2013 to 2015 Suncity was believed to be laundering
Chau, Suncity junket representatives, and key up to AU $2 million per day using various money
players were also found to have made numerous laundering methodologies, and...it was suspected
multi-million-dollar transfers indicative of money that a significant amount of that cash was the
laundering. These transactions took place between proceeds of drug trafficking activities.”27 Moreover,
Chau’s Suncity junket deposit account and various the Australian inquiry itself identified Chau as a
deposit accounts at Crown casinos held by key probable triad associate, citing casino due diligence
players on Suncity junket programmes, other documents raising “extremely serious concerns
about the probity of Suncity and its founder Mr.
21 Parliament of New South Wales, Australia. Casino Inquiry.
Alvin Chau [indicating] ongoing connections with
2021. Accessed at: https://www.parliament.nsw.gov.au/tp/
files/79129/Volume%201%20-%20Inquiry%20under%20 triads and the facilitation of organized crime by
section%20143%20of%20the%20Casino%20Control%20Act%20 Suncity.”28
1992.pdf.
22 It is understood that Alvin Chau was the financier of the Iek
Junket. This designated room was located on Level 1 of The Star’s More recently, in February 2023, Australian
Darling Hotel. The Iek Junket was branded the Suncity Room and authorities dismantled a money laundering
was for Suncity’s exclusive use in the period from 1 July 2017 to
1 September 2019, as described in the New South Wales Casino organization with links to Suncity, seizing properties,
Inquiry. cryptocurrencies, and luxury assets worth over AU
23 As part of the junket arrangement, Suncity was prohibited from
exchanging any cash for chips and retaining cash from players 25 Ibid.
at their service desk. An internal investigation by the Star found 26 Ibid.
Suncity was however storing large amounts of cash in sports 27 Ibid.
bags on a balcony off its gaming room and staff were frequently 28 Parliament of New South Wales, Australia. Casino Inquiry.
exchanging casino chips for cash. 2021. Accessed at: https://www.parliament.nsw.gov.au/tp/
24 Australian Securities and Investments Commission, 2022. Accessed files/79129/Volume%201%20-%20Inquiry%20under%20
at: https://download.asic.gov.au/media/040cpjww/2022-12-12- section%20143%20of%20the%20Casino%20Control%20Act%20
68 statement-of-claim-sealed.pdf. 1992.pdf.
 Alvin Chau Cheok-wa (周焯华) and Suncity junket

Source: Seized assets under Operation Avarus-Midas, Australian Federal Police, 2023.

$150 million and charging nine suspects including airport.31 According to authorities, the group
a known business partner of Alvin Chau, under enabled multiple transnational organized crime
Operation Avarus-Midas.29 The syndicate was groups to launder funds derived from criminal
designated as an Australian Priority Organization activities, ensuring their money was circumvented
Target for acting as an “unregulated multi-national or filtered through legitimate systems, including by
bank, able to draw on cash reserves held in exploiting casino junkets as well as daigous32 and
multiple countries around the world to facilitate other informal value transfer systems.33
transactions for criminal clients.”30 In doing so, it
31 Ibid.
is alleged that the international ‘shadow banking’ 32 Underground banking often utilizes the ‘Daigou’ system to move
organization had moved an estimated AU $10 funds. This involves cash from criminal activity being paid into the
billion offshore while amassing a property portfolio accounts of persons buying retail goods in one jurisdiction that
are in demand in another, and subsequently exported for sale
comprised of mansions, commercial properties, there, often in contravention of national customs controls. This
and hundreds of acres of land near Sydney’s second activity requires a large number of bank accounts in the target
country, often provided by overseas students (who may be told
that they are providing money transmission services for other
29 Australian Federal Police, 2023. students, but are likely to know that the activity contravenes
30 Ibid. customs controls in their country of origin.
33 Australian Federal Police, 2023. 69
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Figure 1. International controller money laundering networks34

Controller Coordinator Collector Transmitter

Often based in an overseas The Coordinator in the network is The Collector in an international Transmitters in an international
location, the Controller is responsible for managing the controller network acts upon the controller network are responsible
responsible for directing the Collectors and Transmitters. They direction of the Controller or for getting the proceeds of crime
activities of the network and execute the instructions of the Coordinator and collects the offshore. This is usually
liaising with organized crime Controller and may be based in proceeds of crime from organized accomplished through structured
groups who want to launder locally or overseas. This role is not crime groups generally through depositing into bank accounts,
money. The Controller's business always present in an international token-based35 exchanges. They can handing cash to a registered or
model relies heavily on their controller network and depends on then provide the money to unregistered remittance service, or
reputation and ability to guarantee the size of the group in a given Transmitters to process, or fill the to a third party to balance
the transmission of value from one jurisdiction. role of Transmitter themselves to unrelated transactions undertaken
jurisdiction to another. The deal with the proceeds of crime. through informal value transfer
Controller charges a commission systems, including those operated
for each transaction undertaken by by Hawala and other similar service
their network, and also generates providers.
profit by negotiating the currency
exchange rate in their favour.

34 35
Source: Australian Federal Police, 2023.

Beyond the range of demonstrated criminality and presented by Australian authorities.36 As

related to Suncity and Alvin Chau, several other discovered during the casino inquiry, the Hot Pot
documented incidents point to extensive misuse junket was found to have generated hundreds of
of junkets by transnational organized crime groups millions of dollars in turnover for Crown Casino
in Australia. Among the highest profile relate to through its operator, Ng Chi Un.37
the Sam Gor (三哥) drug trafficking network, also
known as ‘The Company’, with several junket Suky Lieu, who was convicted of drug trafficking
operators, including Suncity, known to have had and money laundering in Australia in June 2015 for
relationships with the syndicate. Most notably, one having attempted to import a commercial quantity
former senior member of Sam Gor was known to of heroin into Australia to the country from Viet
authorities to have been a silent partner of the Nam, was also tied to the country’s junket business.
Macau SAR-based Hot Pot junket, which operated Court records describing phone taps aired during
at Crown Casino according to intelligence obtained the prosecution of Lieu and his associates detail
how a junket was used to wire millions of dollars to
34 An International Controller Network specializes in laundering Hong Kong SAR following instructions disseminated
the proceeds of crime between jurisdictions. These professional
by one senior Sam Gor member. Moreover,
money laundering networks have extensive global reach and
employ a variety of money laundering methodologies. The Lieu’s associate and former junket operator, Roy
networks are hierarchical in nature and consist of a number of Moo, was also convicted of money laundering
defined roles, consisting of a controller, coordinator, collector
and transmitter. At various levels, records are kept to enable the
in 2013 and imprisoned. According to Australian
controller to balance transactions, manipulate cash pools, and authorities, while Moo was subsequently barred
keep track of remittances. The coordinators and collectors will from attending Melbourne Crown Casino, he
keep ledgers or electronic records of transactions.
35 When criminal groups ultimately provide cash to the collector,
36 Bergin inquiry public hearings under section 143 of the Casino
the collector produces a bill with a unique serial number, and the
Control Act 1992 (NSW), Government of New South Wales,
criminal(s) is assured that the collector is the person meant to
2021. Accessed at: https://www.parliament.nsw.gov.au/tp/
receive the cash – nobody else could have that bank note with
files/79129/Volume%201%20-%20Inquiry%20under%20
its unique serial number. When the collector hands over the bill,
section%20143%20of%20the%20Casino%20Control%20Act%20
that bill acts as a kind of receipt: the criminal(s) can show it to
1992.pdf.
their boss in the event of a loss.
37 Ibid.

70
 Alvin Chau Cheok-wa (周焯华) and Suncity junket

continued arranging the laundering of funds back transmitted through the junket as VIP rollings over
to Hong Kong on behalf of Sam Gor. Moo made several weeks and ultimately ended up in casinos
several transfers to the Bank of China in Hong Kong in jurisdictions outside of the Philippines. This
from Crown Casino’s bank account in Australia, was later confirmed by Solaire’s lawyer during the
specifically utilizing a VIP account owned by an associated Senate Committee on Accountability
Indonesian junket operator, the Madam Ang Junket of Public Officers and Investigations (Blue Ribbon
Group, which employed him.38 At the same time, Committee) hearings.43 Beyond involvement in the
footage of Moo taken in 2012 and presented during Bangladesh Bank heist, Alvin Chau and Suncity are
the casino inquiry, showed the junket operator also understood to have helped facilitate sanctions
collecting AU $191,000 in cash in a shopping bag evasion and oil smuggling using a sophisticated
and taking it to Crown Melbourne.39 network of falsified vessel identities, ship-to-ship
oil transfers, and various underground banking
Philippines and money laundering schemes through Suncity
associates connected to various sanctioned
Prior to the arrest of Alvin Chau in December entities.44
2021, Suncity was a major player in the Philippine
casino industry. At the time, Suncity was among the Following Suncity’s implication in the Philippine
leading junket operators in the country, running senate inquiry and growing law enforcement and
half a dozen VIP rooms as well as an integrated regulatory pressures in both the Philippines45 and
casino resort being developed in Entertainment China, in 2019 Suncity sold its Philippine-based
City, Manila, by Suntrust Homes.40 proxy betting company to a fellow junket operator
who was previously arrested for illegal betting in
As described in the regional section of this report, 2014 alongside an alleged senior 14k triad member
in 2016, several Philippine-based casinos and junket who is understood to possess strong connections
operators and agents played an important role in to the Hell’s Angels outlaw motorcycle gang in both
laundering approximately US $81 million stolen in Australia and Canada, according to law enforcement
a in a Lazarus Group-attributed cyberattack from sources.
accounts of the Bangladesh Bank account held
at the Federal Reserve of New York. According While the company and platform were subsequently
to filings by the Bangladesh Central Bank with renamed to remove any association to Suncity, a
the New York Southern District Court in January Suncity executive testifying at trial in 2022 revealed
2019, as well as records in the Philippines, Alvin that the company continued to receive 50 per cent
Chau had been the recipient of a large portion of of the business’s profits and also paid staff salaries
the stolen funds that were laundered through the and other business costs associated with the
Suncity junket in the Solaire Hotel and Casino.41,42 operation.46 At the same time, witness testimony
More specifically, the documents confirm that the also indicates that the Suncity I.T. team had created
money launderers had exchanged Solaire Casino and maintained a new management system named
chips worth 903.7 million pesos or US $20 million ‘Opsman’ for the company’s new ownership.
for an equal amount of non-negotiable Suncity
junket chips, which were then systematically Following a series of complaints of alleged financial
and investment irregularities against Suncity
38 Ibid.
39 Supreme Court of Victoria at Melbourne, 2021. Accessed Group Manila, in 2021 the Philippine Amusement
at: https://www.supremecourt.vic.gov.au/sites/default/ and Gaming Corporation (PAGCOR) Board of
files/2021-04/Crown%20Resorts%20Shareholder%20Group%20
Proceeding%20Statement%20of%20Claim.pdf.
Directors designated a committee to conduct a
40 Ben Blaschke, Suncity Group issues US $148 million loan to
Philippines subsidiary SunTrust for Manila casino development, 43 Senate Committee on Accountability of Public Officers and
Inside Asian Gaming, July 2020. Available at: https://www. Investigations (Blue Ribbon Committee), 2016.
asgam.com/index.php/2020/07/26/suncity-group-issues-us148- 44 Examination of corporate records and vessel ownership
million-loan-to-philippines-subsidiary-suntrust-for-manilacasino- documents as well as meetings with regional financial intelligence
development/. officials, 2023.
41 Ibid. 45 In addition to being implicated in the Bangladesh Bank heist,
42 Ministry of Justice of the Philippines, 2022. Accessed at: https:// regional law enforcement authorities also informed UNODC
elibrary.judiciary.gov.ph/assets/dtSearch/dtSearch_system_ that in 2019 they discovered a large number of junket operators
files/dtisapi6.dll?cmd=getdoc&DocId=93584&Index=*47d2af9 offering proxy betting services through unlicensed live-dealer
3eea3c41eede94fa5db1eb960&HitCount=16&hits=b2+d6+f5+1 streaming services from their respective VIP rooms, posing
3e+185+194+227+48f+699+784+7af+80b+845+9b7+b03+b16+- significant money laundering risks.
&SearchForm=C:%5celibrev2%5csearch%5csearch_form. 46 Published witness testimony, public hearings transcript.

71
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

formal inquiry into the company.47 In February dismantled a synthetic drug manufacturing facility
2022, the committee found Suncity and Alvin in Malabon City and arrested nine individuals.51
Chau unsuitable to hold any authority and license According to law enforcement and criminal
to operate a junket business in the Philippines.48 intelligence officials involved in the case, shipments
In relation to the complaints filed against Suncity, of precursor chemicals sourced by the drug
law enforcement authorities informed that the syndicate were arranged at a VIP room in Macau
majority of complainants were heavily connected SAR while payments were subsequently arranged
to offshore online gaming operators based in the through a junket operator and disbursed using
Philippines, with several complainants stating casino chips.52 Concerningly, as reported by local
they chose to store large volumes of cash with the law enforcement, those arrested were known to
junket as a high return ‘investment’.49 According to have frequented integrated casino resorts in the
law enforcement, most complainants involved in Philippines, namely the Solaire Hotel & Casino,
the case struggled to offer adequate explanations where Suncity VIP rooms were operating at the
regarding the source of the funds in question.50 time.

Cambodia

In 2018, Alvin Chau expanded Suncity into

Cambodia, establishing a strategic business and
consulting partnership with Golden Sun Sky
Entertainment and CEO Dong Lecheng, who were
both sanctioned under U.K. Global Human Rights
Sanctions on December 202353 to develop and
oversee the operational management a US $360
million beachside integrated resort casino in the
coastal city of Sihanoukville.54 That same year, Chau
and Suncity signed a deal to establish a VIP room at
Phnom Penh’s Naga World casino, followed by the
grand opening of the XiGang International Suncity
VIP Club at the Xi-Hu Hotel in partnership with K99
Group and K99 Junket, with the signing ceremony
attended by Alvin Chau, Dong Lecheng, and
Facilitator 1.55,56 The XiGang International Suncity
VIP Club was established on the second floor of the
Xi-Hu Hotel, consisting of 20 gaming tables in three
rooms. Notably, the integrated resort was developed
in part by Property Development Company 1 which
holds the same business registration address as the
Xi-Hu Hotel and was co-founded and co-directed by
Source: PAGCOR decision on Suncity Group Manila and Alvin Chau the late brother of Facilitator 1, Facilitator 2.
unsuitability, February 2022.
51 Official briefing by regional law enforcement and criminal
intelligence authorities, 2018.
It is also worth noting that members of drug 52 Ibid.
trafficking groups, including Sam Gor, have been 53 Office of Financial Sanctions Implementation HM Treasury,
Global Human Rights Sanctions, Financial Sanctions Notice,
known to frequent casinos with junket operators December 2023. Accessed at: https://assets.publishing.service.
in the Philippines, a significant indication of gov.uk/media/6572d548049516000d49be78/Notice_Global_
money laundering. In 2018, Philippine authorities Human_Rights_081223.pdf.
54 Suncity Group, Suncity Group Management and Consultancy
47 PAGCOR Suncity Committee, February 2022. Accessed at: https:// Limited Announcing Strategic Partnership with Golden Sun
www.pagcor.ph/regulatory/pdf/announcements/decision- Sky Entertainment Co., Ltd., September 2018. Available at:
regarding-suncity.pdf. http://store.todayir.com/todayirattachment_hk/suncity/
48 Ibid. attachment/003258139-0.PDF.
49 Discussions with regional law enforcement authorities, 2023. 55 K99 Group, 2019. Accessed at: k99group.com/news/17.html.
50 Ibid. 56 Suncity Group, 2019. Accessed at: https://mp.weixin.qq.com.
com/s/74l9G7Pqg8kpTnvyahyiQ.

72
 Alvin Chau Cheok-wa (周焯华) and Suncity junket

Signing ceremony between Alvin Chau, Dong Lecheng, and other associates, 2018, and Criminal verdict No. 63, 2018, issued by the People’s Court
of Mangshi, Yunnan Province of China. Source: Suncity Group, and People’s Court of Mangshi, 2018.

With respect to the partnership between Suncity Bank says the company engaged in sanctionable
and Golden Sun Sky Entertainment, Dong Lecheng, procurement practices in connection with the
known as Heng Tong in Cambodia following his Zhejiang Rural Water Supply and Sanitation Project,
naturalization in 2014,57 is widely cited across a multi-million-dollar project funded in part by the
Chinese criminal records for involvement in various World Bank.61 The notice outlines Yunnan Jincheng’s
illicit activities tied to his Yunnan Jincheng Group. For pattern of misconduct, noting in particular that
instance, a 2015 court document from the People’s Yunnan Jincheng engaged in fraudulent practices in
Court of Taoshan District, Qitaihe City, Heilongjiang, bids for three separate contracts.62
refers to a 2006 investigation into Lecheng and his
partners for having established Maida Oriental More recently, in June 2023, the Yingshang
Company in the Maizhayang Special Economic Zone County Public Security Bureau of Fujian issued a
located in Kachin State, Myanmar, and profiting by criminal notice following a multi-year investigation
renting out and managing gambling halls illegally concerning illegal online gambling and telecom
advertising in mainland China and facilitating cross- fraud operations housed in the Sunshine Bay Hotel
border gambling.58 A separate court record from (西哈努克海纳天) and infamous ‘Chinatown’
2009 also details how the Group bribed a former compound area in Sihanoukville. It is worth noting
deputy director of the Management Committee of that Sunshine Bay was co-founded and co-directed
the Border Cooperation Zone of Ruili City, China, to by Facilitator 1, while a significant portion of the
obtain a lucrative highway construction contract ‘Chinatown’ compound was developed by Dong
for its subsidiary company, Ruili Jingcheng Road Lecheng and Yunnan Jincheng Group. Sunshine
and Bridge Construction Engineering.59 Bay Hotel also shares partial common ownership
with the K.B. Hotel, another sanctioned entity
In March 2020, the World Bank issued a notice under UK Global Human Rights sanctions, part of
of uncontested sanctions regarding a subsidiary what is better known as the ‘Kaibo’ area within the
controlled by Lecheng, Yunnan Jincheng compound.63
Construction Engineering.60 In the notice, the
61 For more information on the project, see https://projects.
57 Dong Lecheng became a naturalized Cambodian citizen under worldbank.org/en/projects-operations/project-detail/P133018.
Royal Decree NS/RKT/0214/144, obtaining the name of Heng 62 World Bank, Notice of Uncontested Sanctions Proceedings,
Tong on 03 February 2014. Sanctions Case No. 41, IBRD Loan Number 8424-CN, March 2020.
58 People’s Court of Taoshan District, Qitaihe City Criminal verdict, 63 Office of Financial Sanctions Implementation HM Treasury,
Tao Xing Chu Zi No. 64 (Chinese), 2015. Global Human Rights Sanctions, Financial Sanctions Notice,
59 People’s Court of Mangshi, Yunnan Province Criminal verdict, December 2023. Accessed at: https://assets.publishing.service.
Cloud 3103 Xingchu No. 63 (Chinese), 2018. gov.uk/media/6572d548049516000d49be78/Notice_Global_
60 World Bank, Notice of Uncontested Sanctions Proceedings, Human_Rights_081223.pdf.
Sanctions Case No. 41, IBRD Loan Number 8424-CN, March 2020.

73
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Source: Notice published by the Yingshang County Public Security Bureau, June 2023.

The compound area consists of some of the most Together with Xu Aimin, both Facilitator 1 and
well-documented,64 violent, and heavily guarded Facilitator 2 also presided over the 2019 launch of
fraud parks in Southeast Asia, serving as a human the Junket Group 1 VIP room in the XI-Hu Hotel. In
trafficking, online gambling, and cybercrime hub 2015, then-majority shareholder of Junket Group 1,
as widely confirmed by regional law enforcement who is also an alleged high-ranking triad member,
authorities and testimonies of rescued victims. was arrested by Hong Kong police for laundering
With respect to K.B. Hotel, the company was US $231 million through a series of bank accounts
notably co-founded and directed by Facilitator 2 in Southern China connected to property deals
and Xu Aimin, a naturalized Cambodian national known to be the proceeds of organized crime.
who is wanted65 by Chinese authorities for A 1992 United States Senate Hearing Report on
leading an online gambling ring and laundering Asian Organized Crime identified this individual
millions of dollars through multiple Hong Kong as a high-ranking lieutenant of the Wo Hop To
bank accounts. It is worth noting that the pair co- triad (和合圖)67 which was further substantiated
directed a second company, Investment Company during an independent due diligence investigation
1, which corresponds to a Cambodian-based VIP report conducted by Las Vegas Sands, a partner of
Club and official Suncity partner. The Club claims Junket Group 1, which found that the individual
to offer a one-stop premium service in partnership was “undoubtedly a leading member of the Wo
with Suncity VIP Club, offering VIP gambling Hop To Triad Society in Hong Kong SAR and Macau
credit arrangements, remittance advice, and SAR.”68 In 2013, the individual was also implicated
other financial services, and listing ‘Company1@ in the trial of former Birmingham City Football
Meg-Star.com’ under its contact information. Club owner, Carson Yeung, who was convicted on
Incidentally, the verdict against Alvin Chau in Macau five counts of money laundering totaling US $93
SAR repeatedly mentions the Meg-Star junket (鉅 million, with some of this activity reportedly linked
星國際) as a vehicle for laundering money.66 to Junket Group 1.69

64 UNODC, Casinos, cyberfraud and trafficking in persons for

forced criminality in Southeast Asia, Policy Brief, 2023. Accessed
at: https://www.unodc.org/roseap/uploads/documents/ 67 United States Department of Justice, 1992. Accessed at: https://
Publications/2023/TiP_for_FC_Summary_Policy_Brief.pdf. www.ojp.gov/ncjrs/virtual-library/abstracts/asian-organized-
65 Hong Kong High Court Miscellaneous Proceedings No. 1072 of crime-new-international-criminal-hearings-permanent.
2016, Secretary of Justice v. Xu Aimin and Another Party. Available 68 International Risk Group. Accessed at: https://www.scribd.com/
at https://vlex.hk/vid/secretary-for-justice-v-845328111. document/283047812/CCT-and-Reuters-Report#
66 Acusação do Ministério Público n.º: 1345/2022. https://www. 69 Wanchai district court, Hong Kong SAR, 2013.
court.gov.mo/sentence/zh-9f8cd198757f3527.pdf.

74
 Alvin Chau Cheok-wa (周焯华) and Suncity junket

Xu Aimin, who was sentenced to 10 years imprisonment and is wanted

by authorities in China, together with Associate 1 and Associate
2 and executives of Junket Group 1 during the VIP room opening in
Sihanoukville, Cambodia, 2019. Source: Guangdong Group Junket VIP
Club.
Source: Hong Kong SAR Court of Appeal document related to Xu
Similarly, in 2019, Facilitator 1 and 2, also presided Aimin’s online gambling case, 2016.
over the grand opening ceremony of another
Macau-based junket operator, Junket Group 2, at Fraud Park 1 is another venue characterized by
the Nanhai Hotel in Sihanoukville, together with confirmed incidents of unlicensed online casinos,
the junket’s senior representatives. The same cyberfraud, and forced labor located within
1992 Senate Hearing Report cited the director and Sihanoukville’s ‘Chinatown’ compound.71 It was
controller of Junket Group 2 as a senior member developed by Dong Lecheng and his Yunnan Jincheng
of the Wo Hop To triad that is engaged in the Group, and while the project was reportedly sold
“promot[ion] of heroin trafficking, illegal gambling, off to ‘sub-owners’ in 2018,72 units within the
loansharking, extortion, and alien smuggling.”70 Fraud Park 1 buildings are well-documented as
having been rented to companies running a range
Chau also established an extensive partnership of online gambling and cyberfraud operations.73,74
with purported Heavenly Way Alliance (天道盟) Among them, K99 Group, which had developed
triad member, Associate 1, of Taiwan PoC, and the several properties in the compound, was reported
Junket Group 2 VIP club, opening several joint VIP in October 2022 by Vietnamese state-owned media
rooms in the Okada and City of Dreams integrated to have lured 65 Vietnamese nationals into the
resorts in Manila, as well as MGM Macau and compound and forced them carry out cyberfraud
Macau Galaxy resort Junket Group 2 also operated following initial promises of high paying, legitimate
within the Xi-Hu Hotel, and is connected to a employment.75 More recently, in April 2023, a joint
hotel, casino, and tech-park in Bavet, Cambodia raid was conducted by the Sihanoukville Provincial
which has faced numerous allegations of human Police and Provincial Prosecutor’s Office on Xing Tian
trafficking for forced criminality. In November 2022, Di Casino following reports of unlawful detention,
Associate 1 was arrested by authorities in Taiwan
71 Discussions with regional law enforcement authorities, 2023.
PoC in connection to various business dealings with 72 Khmer Times, August 2022. Accessed at: https://www.
Associate 2, also of Taiwan PoC, on charges relating khmertimeskh.com/501137150/yunnan-jingcheng-group-co-ltd-
to money laundering and underground banking strongly-deny-charges-of-human-trafficking-fraud-cyber-fraud/.
73 In October 2021, following a request from the Indonesian
using online casinos, third-party payment platforms, embassy, Cambodian police rescued 41 Indonesian nationals
and cryptocurrencies (more information available from Jinshui Park from forced labour conditions.
in below case study chapter on Taiwan PoC, Money 74 Beijing Communist Youth League, Beijing Youth Daily
Newspaper, 2022. Accessed at: http://web.archive.
Laundering Networks, and Transnational Organized org /web/20230321033531/https://freewechat.com/a/
Crime in the Mekong). MjM5NzUyNjc0MA==/2650557728/1.
75 VietnamPlus, Viet Nam News Agency. Ministry of Information
and Communications. October 28, 2022. Accessed at: https://
70 Ibid. www.vietnamplus.vn/kien-giang-tiep-nhan-them-cong-dan-viet-
nam-tro-ve-tu-campuchia/825994.vnp.

75
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

torture, and extortion. Authorities confirmed the Executive Officer of the Asia-based subsidiary of
allegations on arrival, arresting several suspects at White-Label Company 1 since 2019. In an official
the casino belonging to Facilitator 1, and rescuing a company filing, Associate 3 was given 637,000
victim from Taiwan PoC. Authorities reported that share options as reward for “services in relation to
the victim had his passport confiscated when first the company’s integrated entertainment platform
arriving at work, with the company using the excuse and non-fungible token (NFT) production business”
of delays issuing his visa and work permit. According by Yeah-Yeah Group, formerly known as the ‘Sun
to victim testimony, the man was subsequently Entertainment Group Limited, part of Suncity
beaten, handcuffed, and forcibly indebted at gun Group, in a Hong Kong Stock Exchange filing from
point.76 It is also worth noting that Xing Tian Di 2022.80
Casino shares the same registered address as the
abovementioned Golden Sun Sky Casino.77 Taken
together, these records provide clear indication of
significant criminal activity.

Suncity-controlled white-label in the Isle of Man

Following the arrest and conviction of Alvin Chau,

several British Members of Parliament voiced
concerns78 through the All-Party Parliamentary
Group (APPG) for Gambling Harm over apparent
connections between Suncity and an Isle of Man-
registered white-label company facilitating online
gaming licenses for Asian-facing operators. More
specifically, Chau and Suncity Group appear to
have controlled White-Label Company 1 and two
subsidiaries in Europe and Asia, as indicated by
several documented connetions between the
entities.

For instance, in August 2014, a press

release published by one betting service provider
following its announcement of a multi-year Corporate records connecting Sun Entertainment to Associate 3 and
White-Label Company 1.
partnership with the European subsidiary of White- Source: Companies Registry, Isle of Man and Hong Kong Stock
Label Company 1, stated that it “...is owned by [the Exchange.
company], part of the Suncity Group, the largest
provider of live dealer casinos in Asia.”79 Moreover, Associate 3 also previously sat on the board of
an annual return and notice of change of directors of a leading I.T. solutions provider and systems
filed by White-Label Company 1 with the Isle of integrator which operates from Taguig, Philippines,
Man authorities shows that Associate 3, a national while also serving as a Head of Development for a
of a Southeast Asian country, served as the Chief Singaporean gaming company. Associate 3’s profile
on the former’s website states that he was “the
76 Cambodia General Commissariat of National Police, April 2023.
Accessed at: https://police.gov.kh/detail/6M9qGkFrFc1XiQKl4R CEO and Director for both White-Label Company
Rd?fbclid=IwAR2cvtIfdO0IeaJ6uC0ho2UEPpIBn8VOA2GQU6wTr 1, a B2B online gaming company ands 138.com,
E2MWnxNOUya5cP9Tjk.
77 Cambodia Ministry of Commerce, Online Business Registry.
a B2C online gaming company, concurrently.”
Accessed at: https://www.businessregistration.moc.gov.kh/ 138.com81 is the predecessor of 138Sungame, an
cambodia-br-companies/viewInstance/view.html?id=48e104de Asian-facing online live-dealer casino which was
66a7c46f0057fe540258afcddbc8ed467de4151aa706d7be037b9
9fa&_timestamp=3163463575750529.
owned and operated by Suncity Group in the First
78 Manx Radio, Isle of Man, 2023. Accessed at: https://www. Cagayan Special Economic Zone in the Philippines,
manxradio.com/news/isle-of-man-news/mps-call-for-
investigation-into-manx-company-with-alleged-links-to-jailed-bi 80 Hong Kong Stock Exchange filing by Yeah Yeah Group Holdings
llionaire/?fbclid=IwAR1iOoWemvt_2i1jK70lgcomK8odYGjswmz (formerly known as Sun Entertainment Group) Ltd, 2022.
WLD26I9tFoZVeOdJ9oIehnYw. 81 See 138.com’s official YouTube channel. Accessed at: https://
79 Official press release of unnamed betting service provider, 2014. www.youtube.com/@138Sungame/videos

76
 Alvin Chau Cheok-wa (周焯华) and Suncity junket

Webarchive of 138sungame gameplay, 2013.

as confirmed by former 138.com commercial

director by a former 138.com commercial director
and other industry experts.82 The company was
one of Suncity’s first UK-licensed online gambling
operation dating back to 2013 when the platform
formed a partnership with high profile English
Premier League football clubs. Corporate filings
and legal documents reviewed for this report
also indicate that Chau is linked to a group of Source: Corporate documents for Cheuk Wah Technology and SC88
Philippine-registered gaming companies connected Technology, Philippines Security Exchange Commission.
to White-Label Company 1, including Sun Ventures
Development and Cheuk Wah Technology (later
renamed SC88 Technology) which had operated As of January 2023, 10 Premier League football
multiple Suncity online casino websites from within clubs were partnered with 8 Asian-facing betting
the Cagayan Special Economic Zone since 2008. companies licensed by White-Label Company 1.

While beneficial ownership remains undisclosed

at the time of writing, numerous suspicious Asian-
facing offshore online gaming companies targeting
jurisdictions where gambling is illegal such as
China, Thailand, and Viet Nam, have been able to
obtain UK gaming licenses through White-Label
Company 1. These companies have subsequently
been able to obtain lucrative sponsorship deals
with professional football clubs in the UK, resulting
in calls by officials to launch an investigation led
by the British gaming regulator. In April 2023, the
UK Gambling Commission (UKGC) also issued a
£316,250 fine against White-Label Company 1,
which runs 19 gambling websites at the time of
writing, for anti-money laundering (AML) and social
responsibility failures. The AML failures included not
having a money laundering and terrorist financing
risk assessment which adequately addressed risks;
not adequately considering and mitigating the
money laundering risks posed by their business-
to-business relationships, and having ineffective
policies and procedures in relation to due diligence
undertaken prior to white-label agreements.
82 UNODC meetings with UK-based gaming industry experts, 2023.

77
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

78
 Taiwan PoC, Money Laundering Networks, and Organized Crime in the Mekong

Taiwan PoC, Money Laundering Networks, and

Organized Crime in the Mekong

Taiwan PoC-based organized crime groups have

a longstanding history in Southeast Asia, and
particularly the Mekong region. These roots go
back to the heroin trade in north Shan State, and
in recent years have included industrial-scale
synthetic drug production and trafficking, money
laundering, underground banking, and increasingly
online casinos, cyberfraud, and associated human
trafficking. Authorities attribute and connect
several cases in particular to the Bamboo Union (
竹聯幫) and Heavenly Way Alliance (天道盟) (also
known as the Celestial Way) groups.

In addition to the well-documented presence of

trafficking and chemist networks from Taiwan
PoC in and around the Golden Triangle area of
Myanmar, in recent years Cambodia has been
increasingly targeted by Taiwanese networks for
the illicit manufacture and trafficking of synthetic
drugs, and particularly ketamine, as well as money
laundering. Seizures of the ketamine in Cambodia
have increased significantly, amounting to nearly
2.8 tons in 2021 and over 13.5 tons of the drug in
2022.1 During the week of 4 July 2022, for instance,
Cambodian authorities arrested 11 suspects from
China and Taiwan PoC, seizing a sophisticated
Images of seized clandestine synthetic drug laboratory, Kampong
clandestine ketamine laboratory together with Speu, Cambodia. Source: UNODC, 2022.
several chemical storage facilities in Svey Rieng
province approximately 10 km from the Viet Nam More recently, In July 2023, Cambodian authorities
border. conducted a joint operation with U.S. and
Taiwanese PoC law enforcement officials, seizing
1 UNODC, Synthetic Drugs in East and Southeast Asia, 2023. 789 kg of ketamine in Sihanoukville and arresting
Accessed at: https://www.unodc.org/roseap/uploads/ six traffickers including a believed high-level
documents/Publications/2023/Synthetic_Drugs_in_East_and_ member of the Bamboo Union. Authorities stated
Southeast_Asia_2023.pdf.

79
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

that the drugs originated in Myanmar and entered to open a payroll account in the bank, but the
Cambodia by transiting through Lao PDR to a deposit book, card and account use rights
storage facility in Sihanoukville, with the shipment must be turned over, which in fact become
ultimately destined for Taiwan PoC.2 According to the company’s nominee account, and the
the Criminal Investigation Bureau of Taiwan PoC, employees are carefully monitored, which
the ringleader of the group, Chen Qixiang (陳啟祥), shows the criminals’ [money laundering]
was a high-ranking member of the Heavenly Way knowledge very capable.
Alliance triad.3 In 2019, Taiwan PoC authorities also
convicted high-profile trafficker Lin Hsiao-tao (林孝 Illegal gambling companies need a large number
道). Hsiao-tao was reported by police as controlling of nominee accounts to convert gambling
approximately one-third of the drug supply in Taiwan money for [money laundering]. The distribution
PoC and was convicted for arranging large maritime of labor, people from mainland China are the
shipments of methamphetamine, ketamine, and capital owners, the IP address is set up in the
heroin from the Golden Triangle area of Myanmar Philippines, and Taiwan is used as the gambling
through Cambodia and Thailand using a fishing [original equipment manufacturing] industry
fleet for shipment and high sea exchanges.4 Law base, setting up offshore internet data center
enforcement in the region have reported Taiwan in Hong Kong SAR, Macau SAR, Southeast Asia
PoC-based traffickers as receiving payments in part or the United States, and use the Virtual Private
through the Suncity junket network.5 Network … to avoid detection. The countries
or regions involved in the inflow and outflow
Unsurprisingly, the vast profits generated through of criminal proceeds are all over Asia, mainly
the regional drug trade in Southeast Asia, and including Mainland China, Hong Kong SAR,
particularly in the Mekong, among other crime the Philippines, the United Arab Emirates, Viet
types, have necessitated parallel industrial-scale Nam, and Cambodia.”6
money laundering and underground banking
operations to disburse payments and facilitate Conversations with regional law enforcement have
informal cross-border value transfers, and it is clear widely confirmed these findings and revealed
that both land-based and online casinos have been extensive use of casinos and junket operators by
one of the preferred methods used to do so. In drug production and trafficking networks based
its 2021 anti-money laundering risk assessment, in Hong Kong SAR, Macau SAR, and Taiwan PoC
Taiwan PoC authorities stated the following in in order to facilitate payments and underground
relation to online casinos which it designated as a cross-border money transfers. Notably, the
‘very high’ overall risk rating: abovementioned clandestine laboratory was
located closed to the Cambodian casino enclave
“Criminal groups usually put illicit gains such of Bavet, situated along National Road 1 at the
as fraud and drug trafficking into gambling Vietnamese border. Bavet has become a regional
websites or third-party payment services in hub for Taiwan PoC-based organized crime groups
the form of stored value or exchange tokens, involved in online gambling, particularly operations
and exchange cash for chips, and then require targeting customers based in Viet Nam where
the gambling website to remit the money to a most forms of gambling for locals is illegal. This is
designated account. The proceeds are mixed concerning given that online casinos could be used
with legitimate funds to confuse the cash flow to facilitate drug trafficking-related payments and
and create multiple breakpoints to achieve the money laundering, in addition to servicing actors
purpose of [money laundering]. Furthermore, associated with other crime types.
the gambling company also requires employees
There are several notable cases relating to Taiwan
2 National Authority for Combating Drugs of Cambodia, August
2023. PoC and online casinos, cyberfraud, and associated
3 Criminal Investigation Bureau, National Police Agency of Taiwan money laundering operations based in the Mekong
PoC, August 2023.
4 Hualien Branch of Taiwan High Court. Accessed at: https:// 6 Anti-Money Laundering Office of Taiwan PoC, Risk Assessment,
judgment.judicial.gov.tw/FJUD/data.aspx?ty=JD&id=HLHM%2c1 2021. Accessed at: https://www.amlo.moj.gov.tw/media/20211
09%2c%e4%b8%8a%e9%87%8d%e8%a8%b4%2c2%2c20210302 832/2021%E5%B9%B4%E5%9C%8B%E5%AE%B6%E6%B4%97%
%2c2&ot=in. E9%8C%A2%E8%B3%87%E6%81%90%E5%8F%8A%E8%B3%87%
5 Meetings with regional law enforcement and financial E6%AD%A6%E6%93%B4%E9%A2%A8%E9%9A%AA%E8%A9%95-
intelligence authorities, 2023. %E4%BC%B0%E5%A0%B1%E5%91%8A%E8%8B%B1%E6%96%8
7%E7%89%88.pdf?mediaDL=true.

80
 Taiwan PoC, Money Laundering Networks, and Organized Crime in the Mekong

region. Most notably, at the request of Taiwan PoC Information released by authorities in Taiwan PoC
police, in July 2023, authorities in Thailand arrested and Thailand confirm that Associate 2 headed
Associate 2 (referenced in above case study chapter several online gambling companies operating in
on Alvin Chau and Suncity) for his alleged role in Asia and Europe to support money laundering
a regional telecommunication fraud and money operations. More specifically, Associate 2 led
laundering network which included leading a large- a syndicate which controlled a conglomerate
scale online casino operation, underground money consisting of several international companies used
and cryptocurrency exchanges, and forced labour.7 for laundering the proceeds of online gambling and
Associate 2, who left Taiwan PoC in October 2022 cyberfraud groups based in Cambodia.
after receiving a tip-off on his likely upcoming
arrest and travelled between other Southeast While other case details remain undisclosed due
Asian countries on a Cambodian passport issued to the ongoing trial, Associate 2, in partnership
in December 2021, was charged for his role in with Associate 1, is understood to have serviced
laundering an estimated US $86.62 million in his online gambling operations using Software
addition to violating banking, organized crime, Company 1,9 which he registered in Taiwan PoC,
gambling, and fraud laws. Additionally, authorities as well as companies in several offshore gambling
later stated that Associate 2 had laundered as hubs including, the British Virgin Islands, Curaçao,
much as 20 billion Thai baht (approximately US Cyprus, and Vanuatu, among others. Among
$562 million) through his operation.8 Associate 2’s largest ventures was high-profile
i-gaming white-label, Entertainment Group 1, which
houses major operations in Bavet, Cambodia10 and
remains active, legally or illegally, online across
multiple jurisdictions in Europe, Asia, and the
Americas.

Beyond its online gaming portfolio, Entertainment

Group 1 claimed to have established Casino 1 and
an associated tech-park in Bavet as well as Junket
Group 2 VIP club which until recently operated
in Macau SAR, the Philippines, and in Cambodia
within the Xi-Hu Hotel.11 Junket Group 2 also held
Investigation chart shared by Royal Thai Police, 2023.
an extensive business partnership with Suncity and
Alvin Chau, opening a joint entertainment company
Authorities also seized luxury real estate and in Taiwan PoC alongside several joint VIP rooms
cryptocurrency wallets totaling US $6.4 million of in the Philippines and Macau beginning in 2014 ,
USDT associated with the underground exchange with both Associate 1 and Associate 2 appearing
and money laundering charges. Associate 2 was alongside Chau at various grand opening events
found hiding in a luxury condominium in Bangkok, throughout the region.
Thailand, and extradited in August 2023.
According to prosecutors, Associate 1 and Associate
It is important to note that Associate 2’s arrest 2 had created several international shell companies
and extradition from Thailand followed charges and used money mule accounts to transfer and
announced by New Taipei City prosecutors in commingle clean funds and criminal proceeds using
November 2022 which resulted in the arrest of online gambling platforms and cryptocurrency.
his partner and mentor, Associate 1, an alleged Beyond online gambling operations, Associate 1 and
Heavenly Way Alliance member and former Associate 2 are also understood to have developed
business partner of Alvin Chau. 9 Taiwan Company Information Network, 2023. Accessed at:
https://www.twfile.com/item.aspx?no=55797570&sn=2719159.
10 Awesome Entertainment. Accessed at: https://aegroup.info/.
11 The Venus VIP room within the Xi-Hu Hotel Xigang Casino was
opened in 2019. criminality associated with the Xi-Hu Hotel is
7 Ministry of Justice Investigation Bureau, Taiwan PoC, 2023.
described at length in the above Suncity case study chapter
Accessed at: https://www.mjib.gov.tw/news/Details/1/892.
under the Cambodia subsection.
8 Royal Thai Police press briefing, 16 August 2023.

81
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Alvin Chau and Associate 1, among others, at the official launch of the joint Suncity VIP Club in the Philippines, 2018.
Source: Suncity Group official social media platforms, 2018.

online shopping and instant messaging platforms gates. Moreover, Vietnamese reports, together
which provided third-party payment processing with other local reports from across Southeast Asia,
and further helped to obfuscate the source and have named both Casino 1 and the broader Moc
destination of criminal proceeds. Additionally, Bai area as locations where workers have been sold
prosecutors reported that they uncovered evidence and held against their will. These reports include
linking both to kidnapping and extortion rings which an interview featuring a man who helped to rescue
allegedly offered and advertised jobs overseas. three teenagers from Casino 1 in mid-2022, paying a
ransom of US $6,000 per person.12 Online recruiters
It is worth noting that Casino 1 and some of the regularly post work opportunities at the tech-park
online operations of Entertainment Group 1, which associated with Casino 1 on Facebook and Tiktok,
are housed in its nearby tech-park, are located in with basic job descriptions similar to those used by
the Moc Bai commune of Bavet, Cambodia, which other online gambling and cyberfraud operators.
has emerged as a major hub for online gambling,
cyberfraud, and trafficking for forced criminality.
Operations in the area are largely staffed by
workers recruited from China, Taiwan PoC, and
Viet Nam, and while some areas are accessible,
others are blocked by high walls, razor wire, and
guarded gates. Multiple law enforcement sources
and victim testimonies have named both Casino 1
and its corresponding gated compound as locations
where crimes including human trafficking, forced
labour, and extortion have taken place.

The casinos in the Moc Bai complex are located on

the main road, however, behind them are dozens
of buildings that house online gambling operations,
staffed largely by workers from Viet Nam and Aerial overview of Moc Bai commune, Bavet, Cambodia.
China. While some areas are accessible, others
are blocked by high walls, razor wire, and guarded 12 VN Express, 2022. Accessed at: https://web.archive.org/
web/20230519171332/https:/vnexpress.net/hai-lan-sang-
campuchia-chuoc-bay-nguoi-bi-ban-vao-casino-4506294.html.

82
 Taiwan PoC, Money Laundering Networks, and Organized Crime in the Mekong

Additional cases Hsieh Tsung Lun of Taiwan PoC, who was arrested
in 2018 and extradited from Cambodia to Myanmar
Beyond the casino and cyberfraud hub of Bavet, where he is serving a prison sentence.16 According
in a separate case from April 2023, prosecutors in to criminal intelligence officials in the Mekong,
Kaohsuing, Taiwan PoC arrested 21 individuals for Hsieh organized shipments of large quantities
their role in an international money laundering of methamphetamine as well as heroin for the
operation that facilitated the laundering of syndicate while he was working out of a Golden
approximately US $146.1 million over a 10-month Triangle-based casino.
period for criminal groups using online casinos in
Viet Nam. Authorities in Taiwan PoC seized large
numbers of mobile phones, Vietnamese SIM cards,
computers, and a telecommunication network
system, stating that “the phones can receive calls
from Viet Nam, and people can call and enter a
password to transfer profits from gambling.”13

According to authorities, the money that passed

through online casino platforms was meant to
appear as remittances primarily originating from
Viet Nam and processed in Vietnamese Dong. The
group processed the money through foreign bank
accounts and overseas shell companies, taking a
‘handling fee’ to ‘white-wash’ the money in Taiwan Seizure made in relation to Taiwan-PoC and Viet Nam international
money laundering network, April 2023.
PoC and evade law enforcement, allowing for the
money to be returned to Viet Nam and appear
With respect to related human trafficking into
as legitimate, clean profit.14 The use of Viet Nam
online casino and cyberfraud compounds from
is particularly concerning as Viet Nam-facing
Taiwan PoC to the Mekong region, in August 2022,
online gambling operations are proven to have
the Criminal Investigation Bureau of Taiwan PoC
extremely high cross-table rollings and often utilize
reported details of a human trafficking investigation
cryptocurrency (see below table). These revenues
into associates of the Bamboo Union and Heavenly
can help to comingle clean money derived from
Way Alliance, together with other crime groups
legitimate recreational gambling with proceeds of
based in Hsinchu, New Taipei City, Taichung, and
crime that are processed through online casinos,
Taoyuan. Authorities described how the trafficking
obfuscating the source of funds to make them
network lured unsuspecting Taiwan PoC residents
difficult to trace.
with high paying jobs in Cambodia but were instead
being handed to gangs upon arrival and forced
It is also worth noting that law enforcement sources
to work in cyberfraud operations.17 Members
have confirmed that Sam Gor (三哥)network
of the international human trafficking ring were
members, including senior syndicate members,
also found to have previous narcotics and fraud
had previously made visits to casinos in Cambodia,
convictions. The investigation also revealed the use
including NagaWorld. Sam Gor has also been known
of a professional travel agent who was recruited
to arrange underground cross-border payments
to help procure passports, order air tickets, and
for drug shipments from the Golden Triangle and
arrange transport to Taiwan Taoyuan International
East Asia (namely Macau SAR, Hong Kong SAR, and
Airport, where she allegedly advised the outbound
Taiwan PoC) through Mekong-based casinos and
travelers on how to answer questions at customs
junket operators, as well as Vietnamese money
upon arrival in Cambodia.
launderers.15 A member of the Sam Gor syndicate
that frequented casinos including NagaWorld is

13 Kaohsiung Police Department’s Criminal Investigation Corps,

2023.
14 Ibid. 16 Ibid.
15 Conversations with regional law enforcement, 2023. 17 Taiwan PoC Taipei District Court. Accessed at: https://tpd.judicial.
gov.tw/tw/cp-2850-2019907-76179-151.html.

83
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

Table 1. Major illegal online gambling ring betting volume reported by authorities in Viet Nam, 2019-2022

Date Website Betting volume (USD) Location

11/2022 18
Bong88.com and Agbong88.com $83 million Ho Chi Minh City
12/2021 19
Swiftonline.live and Nagaclubs.com $3.8 billion Ho Chi Minh City
11/202120 cp.starcsn.com $1.3 billion Hanoi
11/2021 21
Tai.bxx $609 million Hanoi
11/2021 22
Undisclosed $4.35 million Nghe An
02/2020 23
powgs.com $43.53 million Cau Giay
06/201924 Undisclosed $430 million Hai Phong
04/2019 25
Fxx88.com $1.28 billion National
Source: Viet Nam Ministry of Public Security and provincial police.
18 19 20 21 22 23 24 25

According to information released by Taiwan PoC based in the Mekong, the victims were held purely for
authorities, one of the groups lured 82 Taiwanese the purpose of money laundering. According to
jobseekers to Cambodia in a 3-month period court records, a group of 29 perpetrators controlled
which were confined and held in prison-like almost 100 bank accounts and individual banking
conditions upon arrival and forced to perpetrate information using the identities and documents of
cybercrime. Authorities further revealed that the 61 enslaved victims, with the accounts being used as
group received approximately US $1.67 million in the second or third layers in a sophisticated money
commissions for sending these Taiwanese citizens laundering process. The funds are believed to have
into “cyberslavery.”26 been derived from 246 victims of investment scams
connected to the money laundering operation,
In November 2022, police in Taiwan PoC raided generating approximately US $12.66 million.28
multiple residential buildings, finding 58 victims
kept in captivity in extreme conditions.27 Victims More recently, in April 2023 the Taipei District
were handcuffed, beaten, and reportedly drugged, Court sentenced alleged Bamboo Union member,
however, unlike similar cases for forced criminality Lee Chen-hao (李振豪), to 18 years in prison for
his role in trafficking 88 people into a Cambodia-
18 Viet Nam Ministry of Public Security, Available at: https://
baochinhphu.vn/world-cup-2022-triet-pha-duong-day-danh- based cyberfraud ring, with 8 other accomplices
bac-ca-do-nghin-ty-102221123095348978.htm. receiving between 11 to 16.5 year prison terms.29
19 Lao Cai Police Department, Available at: https://congan.laocai.
At trial, prosecutors had alleged the trafficking
gov.vn/1246/28094/39632/648558/bo-cong-an/triet-pha-
duong-day-danh-bac-tren-mang-lon-nhat-tu-truoc-den-nay-bat- network received US $18,000 per trafficked person,
giu-gan-60-nguoi. with victim passports confiscated upon arrival
20 Viet Nam Ministry of Public Security, Available at: http://
bocongan.gov.vn/tin-tuc-su-kien/tin-an-ninh-trat-tu/bo-cong-
in Cambodia where several would be subject to
an-triet-pha-duong-day-danh-bac-voi-so-tien-khoang-30000-ty- physical violence, punishment, and resold.30
dong-d22-t30428.html.
21 Khanh Hoa Police Department, Available at: https://congan.
khanhhoa.gov.vn/so-thich-khac-nguoi-cua-ong-trum-trong-
duong-day-danh-bac-14-nghin-ty_475127_1_2_article.html.
22 Nghe An Police Department, Available at: http://congan.nghean.
gov.vn/tin-tuc-su-kien/202111/pha-thanh-cong-chuyen-an-
danh-bac-quy-mo-lon-nhat-tu-truoc-toi-nay-tren-dia-ban-thi-xa-
thai-hoa-938871/.
23 Lai Chau Police, Avalable at: https://congan.laichau.gov.vn/view/
tin-an-ninh-trat-tu/cong-an-quan-cau-giay-triet-pha-duong-day-
danh-bac-nghin-ty-qua-mang-52803?mid=2434.
24 Viet Nam Ministry of Public Security, Available at: Ministry of
Public Security of Viet Nam. Accessed at: http://conganthanhhoa.
gov.vn/tin-tuc-su-kien/tin-trong-nuoc/hon-380-nguoi-trung-
quoc-tham-gia-duong-day-danh-bac-khung-o.html.
25 Viet Nam Ministry of Public Security, Available at:
http://en.bocongan.gov.vn/tintuc/Pages/news-events.
aspx?ItemID=5626.
26 Central Investigation Bureau, Taiwan PoC, 2022. Victims of human trafficking rescued in Taipei. Source: New Taipei City
27 Ministry of Justice of Taiwan PoC, 2023. Accessed at: https:// Police, 2022.
judgment.judicial.gov.tw/FJUD/data.aspx?ty=JD&id=SLDM%2c1
11%2c%e7%9f%9a%e9%87%8d%e8%a8%b4%2c1%2c20230322 28 Ibid.
%2c2&ot=in. 29 Taipei District Court, decision, April 2022.
30 Ibid.
84
 Kokang, Special Region 1 of Myanmar

Kokang, Special Region 1 of Myanmar

The Special Regions (SRs) of Myanmar in Shan State the instalment of the Kokang BGF in 2009 and
are home to significant illicit economies, including subsequent displacement of the online gambling
globally significant production of methamphetamine business from Macau SAR into Laukkai, the
and heroin, as well as sophisticated, industrial- commercial and administrative center of SR 1 that
scale money laundering, underground banking, shares its border with China. The growth of the
cyberfraud, and unregulated gambling operations. casino industry in SR 1 has been made possible
Intensifying armed conflict, socioeconomic due to the Kokang BGF’s relations with Nay Pyi Taw,
insecurity, and governance challenges in the SRs which has permitted both formal business access
which are under de-facto control of armed groups, and an autonomous regulatory environment.
together with the country’s increased regional Kokang also enjoys close cultural and business ties
integration with neighbouring countries, has with Yunnan.
further exacerbated the situation and deepened
connections to transnational organized crime. As is the case with many armed groups located in
Shan State and other border enclaves of Myanmar,
While drug production, trafficking and connections the Kokang BGF has a documented history of
between armed groups and major organized involvement in drug production and trafficking.
crime groups are well documented, the country’s Law enforcement and criminal intelligence officials
sprawling, high-tech, and unregulated casino in the Mekong region have reported the presence
operations that facilitate the laundering of of large-scale drug production sites near Laukkai,
proceeds generated within the illicit economy have and analysis of court records in China shows that
not been examined in significant detail. The Kokang over 1,300 cases were registered involving cross-
Self-Administered Zone of Myanmar, known as border crimes emanating from SR 1 between
Special Region 1 or SR 1, under the control of 2010 and 2021, with approximately 800 cases
the Kokang Border Guard Force (BGF), is among related to illicit drugs, 181 to illegal cross-border
the most casino-dense areas of Myanmar, while gambling and money laundering, and 40 involving
other areas including Mongla SR 4, Wa State SR 2, kidnapping.2 These cases include multiple incidents
Tachileik, and Myawaddy are also home to a high relating to companies and operations controlled by
number of unregulated physical and online casino BGF leadership which oversee SR 1’s Gambling and
operations. While SR 1 has been known for its Entertainment Management Committee.3   
casino industry since the 1989 ceasefire agreement
between the Government and Myanmar National
2 UNODC analysis of Chinese court records, 2022.
Democratic Alliance Army (MNDAA),1 the industry 3 The Kokang Gambling and Entertainment Management
has exhibited rapid growth and evolution following Committee oversees the approval of all casino and entertainment
operations of SR 1. Most notably, this includes large-scale online
1 In 2009, MNDAA split into two groups, with one rejecting the casino operations which function using underground banking
Government’s proposal to lay down its arms and the other allying and money laundering networks and have been implicated in
with the Government and transforming their local troops into major money laundering cases in mainland China.
BGF 1006.
85
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

active members, and generating an annual betting

volume of at least US $3.6 billion as of 2021.5
During the course of the investigation, authorities
also discovered two affiliated gambling software
companies, Dayun Technology (renamed Chengdu
Jinan Tiancheng Technology), and Sichuan Qiante
Technology, posing as research and development
companies, while in fact servicing both platforms,
with the latter reportedly established by
representatives of Yuxiang International.6 The
investigation resulted in the arrest of individuals
in Guangxi, Hainan, Sichuan, Fujian and Guizhou
and the seizure of nearly 15,000 bank cards used to
facilitate underground banking using the cover of
online gambling through so-called ‘points running’
syndicates that deposit money and cryptocurrency
to obtain virtual casino chips which could
subsequently be ‘withdrawn’ and cashed out.7
Both online casinos continue to operate across
multiple ‘mirror websites’8 at the time of writing,
despite notifications confirming their use in money
laundering activities. Users who register through
the Werner International agent network may ‘top
Money laundering notice issued by Werner International, 2023.
up’ in-game credit using a range of underground
payment methods and currencies, and cash out
More recently, in December 2023, the Criminal using ‘settlement methods’ in other jurisdictions
Investigation Bureau of the Ministry of Public Security through various ‘fund disbursement’ options.
of China issued ten arrest warrants for high-ranking
members of the Kokang BGF leadership on charges In another case involving a Kokang-based casino
relating to their roles in leading multiple violent and junket operator, GOBO East Entertainment,9
criminal groups engaged in telecommunications also known as Dongfanghui Casino (東方匯赌
and network fraud against Chinese citizens.4 Most 场), a Cambodian subsidiary of the Fully Light
of those charged are members of SR 1’s Gambling International conglomerate which is held by
and Entertainment Management Committee, and members of the BGF leadership, was implicated by
are heavily involved in Kokang’s online gambling the People’s Procuratorate in Guizhou and Shaanxi
and underground banking industry, including the of China in the 2019 convictions of members of local
Werner International, Yuxiang International, and triad groups who had outsourced online gambling
GOBO East online casino platforms (see below). operations by partnering with the company.10
5 Ministry of Public Security of China, 2021. Available at: http://
In December 2019, the Ministry of Public Security www.gdqy.gov.cn/xxgk/zzjg/zfjg/sgaj/xxgk/jwyw/content/
post_1384757.html
of China launched a special investigation into 6 Ibid.
two interconnected online gambling platforms, 7 Ibid.
Kokang-based Warner International and Yuxiang 8 Mirror sites or ‘mirrors’ are replicas of other websites. The
concept of mirroring applies to network services accessible
International, which function using live-dealer through any protocol, such as HTTP or FTP. Such sites have
streaming within large land-based casinos in different URLs than the original site, but host identical or near-
identical content. Mirror sites are regularly utilized by illegal
Laukkai. Authorities reported that both platforms online gambling and cyberfraud syndicates based in East and
served as conduits to facilitate underground Southeast Asia to overwhelm authorities, circumvent law
banking and money laundering, developing a enforcement efforts and ensure business continuity in the event
that a URL is brought down.
business consisting of over 40,000 agents, 300,000 9 Open Corporates, Gobo East Entertainment Co., Ltd. Accessed at:
https://opencorporates.com/officers/275933656).
4 Official WeChat of the Criminal Investigation Bureau of the 10 Official announcement from the Shaanxi Higher People’s Court,
Ministry of Public Security, December 2023. Accessed at: https:// 2019. Available at: https://sxfy.chinacourt.gov.cn/article/
mp.weixin.qq.com/s/sm3wSWuxPSFcuSg4zlEfsQ. detail/2020/01/id/4777038.shtml, https://credit.shaanxi.gov.
cn/345/8528001.html and http://news.jcrb.com/jxsw/201910/
t20191010_2058522.html.

86
 Kokang, Special Region 1 of Myanmar

Source: Fully Light International Telegram Channel and Warner International TikTok and Douyin channels, 2023.

Authorities found that GOBO East colluded with a sanctioned14 armed group which has historically
the syndicate by facilitating end-to-end online been known to be among the region’s largest drug
live dealer and telephone gambling operations producers connected to the sanctioned Zhao Wei
through the company’s platform, offshore servers, transnational organized crime group in Lao PDR.15
call centres, brand and marketing resources, and
underground credit network, and multi-currency
payment and settlement solutions, from Kokang
SR 1.11 The investigation resulted in the conviction
of 121 individuals affiliated with the syndicate,
representing China’s largest record number of
convictions in a single case at the time. GOBO
Entertainment continues to operate, claiming to be
licensed and supervised by the Myanmar Gaming
Inspection and Coordination Bureau, and licensed
to operate under the Cagayan Economic Zone
Authority (CEZA) and First Cagayan Leisure and
Resort Corporation (FCLRC) in the Philippines.

While official records are limited in Myanmar,

it is worth noting that the director of GOBO
East Cambodia is closely affiliated with Warner
International, actively referenced as a senior
member of the company’s leadership across
several official social media channels,12 and both
online platforms have been developed using
almost identical source code.13 Concerningly,
both platforms also appear to be connected to a
variety of formal banking institutions and licensed
cryptocurrency exchanges. Video files of Kokang-
based casino operators including Warner and Fully
Light International also depict casino cages filled Official announcement from the Shaanxi Higher People’s Court, 2019.

with extremely large volumes of cash packaged in

Wa State Bank bags, an unregulated bank based in
SR 2 run by the United Wa State Army (UWSA) – 14 U.S. Department of the Treasury Office of Foreign Assets Control,
Treasury Sanctions United Wa State Army Financial Network,
November 2009. Accessed at: https://home.treasury.gov/
11 Ibid. system/files/136/archive-documents/linkdata--document.pdf.
12 See various regional news articles including: https://k.sina.com. 15 U.S. Department of the Treasury Office of Foreign Assets Control,
cn/article_6601369739_18978e88b00100ox8w.html and https:// Treasury Sanctions on the Zhao Wei Transnational Criminal
page.om.qq.com/page/OA4oWW5RmGytl1TPpyJZWr1w0. Organization, Press Releases, 30 January 2018. Available at:
13 GOBO East Entertainment. Accessed at: http://web.archive.org/ https://home.treasury.gov/news/ press-releases/sm0272.
web/20220721233013/http://zm98.com/ and http://51mnls.
com/.

87
 Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat

GOBO East Exchange ‘Agent Commission Table’ and live-dealer casino Telegram livestream, 2023.

Providing further indication of criminal activity, Pawnshop’ advertises exchanging USDT for ‘pure
Kokang casinos and associated companies have white capital’ at a high rate, citing their strong
developed a robust presence across so-called business reputation. In another affiliated Fully Light
‘grey and black business’ Telegram channels ‘VIP communication channel’, a user named ‘Mr.
facilitating cross-border ‘blockchain’ gambling, Big’ cites difficulty in transferring his company’s
underground banking, money laundering, and multi-billion-dollar cyberfraud proceeds into China
related recruitment in Myanmar, Cambodia, China, and posts a paid recruitment ad hiring a team to
and several other countries in East and Southeast “help the company complete the final conversion
Asia. Among others, this includes underground operation process” and smuggle gold and precious
cryptocurrency exchanges and money laundering stones into China, offering a 10 per cent fee. In
‘motorcade’ (also known as fleet) teams (車隊) the same channel, a different user representing
offering ‘black USDT to cash bleaching services’ an overseas labor service, which appears to be an
facilitated using affiliated online casinos and peer- affiliate of Fully Light International, issues a notice
to-peer transfers arranged through groups linking to brokers to inform that recruited migrant workers
back to the official Fully Light and GOBO East should be aware that they will be illegally smuggled
Telegram channels. The community established by into Laukkai City in Kokang SR 1 of Myanmar through
the companies consists of hundreds of thousands Wa State SR 2, and details the intermediary’s
of members and agents and breaks down into bonus per each recruited labourer. It is also worth
groups facilitating underground banking and noting that several other connected groups linked
cryptocurrency exchange ‘pass-through’ activities, to the channel advertise having large amounts
cybercrime as a service, recruitment of migrant of capital, robust money mule networks, online
smugglers, and development of underground casino operations, and other related resources
banking and money laundering teams. The in countries including Malaysia, Taiwan PoC, the
community also features multiple ‘supply and Philippines, Viet Nam, the UAE, and elsewhere in
demand’ and ‘VIP’ groups which advertise calls for South Asia, the Middle East, and Africa.
underground cross-border value transfers requests
utilizing a variety of methods in real time. Calls
shared in the groups are exclusively issued by Fully
Light administrator accounts, with some backed by
an official ‘Fully Light guarantee’.

For instance, in a post published within one of

the channel’s many ‘supply and demand’ groups,
administrators share a call requesting a large
amount of Singapore dollars in exchange for USDT at
the rate of SGD $1.32. The request goes on to state:
“I will provide USDT, you will provide Singaporean
white capital transfer…one transaction, one return, Source: Fully Light International official underground money exchange
large quantity.” Directly beneath the call, another Telegram groups, 2023.

user claiming to represent the ‘Second Sister’s

88
 Kokang, Special Region 1 of Myanmar

While each individual incident described above

requires verification, the open advertisement of
services and nature of the activities within Fully
Light’s Telegram channels becomes even more
concerning when taking into account that the
conglomerate is known to have developed large
construction projects and an ‘entertainment city’
along the Thai border in Myawaddy, Myanmar,
which is known as a major regional hub for USDT-
based cyberfraud and online casino operations.16
In recent months, several reports confirmed by law
enforcement authorities have emerged of foreign
nationals seeking rescue after being lured into one
of these venues under fraudulent employment
schemes and held for ransom by human traffickers.
The conglomerate also appears to have been
engaged in similar illicit activities in the Philippines
using a company with the same name as the
Myawaddy-based entertainment city.

16 Myawaddy, Myanmar is a BGF-controlled township known

to house one of the largest concentrations of cyberfraud
compounds in Southeast Asia.

89
Regional Office for Southeast Asia and the Pacific
United Nations Building, 4th floor, Secretariat Building, Raj Damnern Nok Avenue, Bangkok 10200, Thailand
Tel. (66-2) 288-2100 Fax. (66-2) 281-2129 E-mail: [email protected]
Website: http://www.unodc.org/roseap
Twitter: @UNODC_SEAP