Interpol elevates scam network to global threat as crypto fraud spreads

Interpol has formally recognized that crypto-related fraud is now at the heart of a sprawling fraud industry, labeling the network a transnational criminal threat as global law enforcement agencies move to tighten coordination around financial flows.

The member states of the International Criminal Police Organization adopted a resolution at the General Assembly in Marrakesh this week, according to a public statement.

The organization said the networks rely on human trafficking, online fraud and forced labor, and now affect victims from more than 60 countries.

“Often under the pretext of lucrative jobs abroad, victims are trafficked into complexes where they are forced to carry out illegal schemes such as voice phishing, romance scams, investment fraud and cryptocurrency scams targeting individuals around the world,” the organization said.

The resolution describes criminal groups that recruit victims with fake job offers and transport them to complexes where they are forced to carry out investment schemes, romance scams and crypto fraud, among other illegal or criminal activities.

Interpol said the groups operating these scam centers use advanced technologies “to deceive victims and mask their activities,” with the cross-border criminal networks operating with a “highly adaptive nature.”

The scam center model first attracted international attention in Southeast Asia, where connections in Myanmar, Cambodia and Laos were documented as sites of large-scale human trafficking and coercive online fraud.

Human trafficking victims linked to the scams came from the region, as well as China and India, beginning sometime in January 2023.

By May of the same year, the disease had spread to certain regions of Russia, parts of Colombia, East African coastal countries and parts of Britain, according to a separate Interpol report. report.

Pig slaughter activities

The criminal network’s ties to crypto were first revealed in July last year, when it emerged that an online marketplace operated by Huione Group, a Cambodia-based financial conglomerate headquartered in Phnom Penh, processed more than $11 billion in crypto transactions linked to scammers.

In May earlier this year, the US Treasury Department had moved to cut off the group from the US financial system after alleging more than $4 billion in money laundering activities linked to fraud operations.

“A few years ago, flows from pig slaughter operations followed relatively predictable paths through mainstream exchanges. Today they are much more dependent on stablecoins, low-fee chains and fast cross-chain swaps to fragment the movement and buy time,” Ari Redbord, a former Treasury Department official now serving as global head of policy at blockchain intelligence firm TRM Labs, told me. Declutter.

TRM Labs has also seen “intensified use of Chinese money laundering networks, OTC brokers and informal payout infrastructure – all of which help operators move value beyond the reach of traditional financial controls,” Redbord added.

“But the story is not one-sided: as law enforcement attention has increased, fraud networks have changed the way they move money, and defenders have become more nimble as well,” he said. “That global coordination is the real change.”

Interpol’s resolution is “part of a broader international shift,” Redbord added. Now the US recently a striking power“partners across Asia and Europe” are now “increasingly aligned with typologies associated with human trafficking scam connections.”

While such networks “thrive on cross-border connections,” they are now “shrinking” to the extent that “windows of action that simply did not exist a few years ago” are now visible, he added.

Coordinated asset tracing to track down lost money is not “just feasible,” Redbord said, saying the process “works when jurisdictions work together.”

“If coordination clicks, you can essentially cut off the exits that these networks depend on,” he added.