Southeast Asia is seeing a rise in online scam centers that are swindling billions of dollars from people, a new report finds.
Transnational Crime in Southeast Asia, published in May by the United States Institute of Peace, outlines a growing threat it says criminal networks pose to global peace and security. Included in the report are findings about scam centers operating throughout the region, including in Myanmar, Cambodia and Laos, and the deep involvement of Chinese criminal networks.
The USIP report was presented in Bangkok in June at an event held at the Foreign Correspondents’ Club of Thailand.
“One of the big findings of the report is about how huge of a problem this is. We’re framing it as a global security crisis,” Jason Tower, Myanmar country director at USIP, said.
“There are three countries in particular in which it’s gotten to a point now where the Chinese-origin criminal groups are able to perpetrate industrial scale, online scamming forced labor: Myanmar, Laos and Cambodia. There are over 300,000 people involved in this horrific practice,” he added.
A total of 305,000 scammers in Myanmar, Cambodia and Laos account for $39 billion in stolen funds annually, out of a total of $63.9 billion worldwide, according to the report. Half a million people are working as scammers, the report estimates.
The scammers, though, are often initially victims themselves. Many are lured into false business opportunities overseas and forced into scam compounds, often located in desolate rural areas, and are punished violently if they try to escape.
Bridget Welsh, a Malaysia-based political analyst on Southeast Asia, spoke at the event and said artificial intelligence technology, lax financial regulations regarding cryptocurrency, money laundering and the gray areas between legal and illegal practices contribute to the problem.
“In the last four years, the level of escalation of the criminal ecosystem is profound. There are a number of factors we need to look at. It’s not just the networks or just about China, it’s about local actors that have a symbiotic relationship. Southeast Asia for a long time has had a very dynamic illegal economy,” she said.
In recent years there has been a rise in scams around online gambling, cryptocurrency and financial investment. Often, the scams involve enticing victims to gradually invest in fake and fraudulent schemes over a period of time. The victims are targeted online to invest, gamble or deposit money into illegitimate schemes, not knowing they are being scammed.
The ongoing conflict in Myanmar has resulted in some scam operations finding themselves a part of the battle. Scam compounds along Myanmar’s borders have been protected and run by affiliates of the military government in Myanmar, the USIP report said.
The northern Myanmar town of Laukkai, in Shan State, is known as a scam center hotspot, with many Chinese gangs operating there, according to the report.
Myanmar’s ruling junta – the State Administrative Council – did not comment on the USIP report and questions asked by VOA about the scam centers but did respond via email that there is use of digital currencies in the country.
“It has come to our attention that illegal transactions involving digital currencies, including USDT [Tether, a cryptocurrency pegged to the U.S. dollar], are being conducted within the country. These activities are in violation of the Anti-Money Laundering Act and the Financial Institutions Act,” it said, adding that those who violate the act “may be subject to imprisonment or fines, or both.”
VOA has contacted the governments of China and Cambodia by email and phone but has not received a reply.
But with Myanmar resistance groups now reportedly in control of Laukkai, they have worked with Beijing to hand over cyber gang families. More than 40,000 Chinese nationals associated with cyber scams in Myanmar have reportedly been deported from Myanmar to China as of December.
Chinese criminal networks collected $3.8 billion in illegal revenue from scams in 2023, with the help of at least 30,000 scammers. The USIP says within the past decade, the criminal networks operating in Southeast Asia have mostly emerged from China.
“Many of these Chinese criminal origins became embedded in the [Southeast Asia] region. In the past five years, the forms of criminality have shifted from things that are more regional to global in Asia, and they’ve reached the point now where they can get much more involved in human trafficking and slavery, and quite sophisticated forms of scamming that are targeting a global audience,” Tower said at the FCCT in Bangkok.
At home, Beijing has tried to take a firm hand on scams.
Online gambling is illegal in China and a telecom fraud law came into effect in December 2022 to try to combat the illegal schemes.
“The report finds that [China] is one of the key victim countries,” Tower said. “More and more people are falling prey to these investment scams.”
With cyber networks operating over multiple countries, all with different priorities and accountability, combating the scams is a challenge.
Criminal networks in Cambodia have seen a $12.5 billion return in 2023 on their scamming operations, half of the country’s official gross domestic product. The USIP report says many of the scamming compounds in Cambodia are owned by local elites.
“The significantly misaligned incentives in places like Cambodia, where there are powerful state actors who are building [scam] compounds, it is not in the incentives to local government officials to properly identify these victims. How do we prosecute this effectively when entire justice systems are run by people who run compounds who are financially benefiting from them?” asked Jacob Sims, a visiting expert at USIP.
Chou Bun Eng, permanent vice chair of Cambodia’s National Committee for Counter Trafficking or NCCT, told the pro-government newspaper Khmer Times, that 80% of human trafficking cases they’ve investigated are “false.”
A coalition operation is required, Welsh said, as a one-country strategy won’t work.
“Ordinary Southeast Asians are on the front line of having to deal with this. The trafficking numbers are high in terms of scams, but the scam victims are high. A lot can be done. It needs to be multifaceted, it can’t just be country specific, it needs to be dynamic, because the criminals are ahead of all of us,” she said.
Erin West, a deputy district attorney from California, suggested pressuring tech companies and governments to act.
“The roots of the problem are the platforms enabling the scammers to meet their victims. What can be done about Meta, LinkedIn, Match.com — how do we apply pressure in a way to get them to root out the bad actors on their platforms?
“Looking at sanctions is another way, and really elevating the conversation to the highest levels of governments and getting them to understand how massive this problem is,” she said.
