KEY TAKEAWAYS
KEY TAKEAWAYS
Transnational crime groups in Southeast Asia, hit with intense scrutiny and law enforcement action earlier this year, are moving into new areas and adapting their operations as they revive and expand global scam operations. In Myanmar — a key center of this internet-based criminal activity — extreme political instability combined with the connivance of the country’s military and its militias continue to provide fertile ground for crime groups, albeit in new configurations. At the same time, a sudden shift in China’s posture toward Myanmar’s military regime has eased pressure on the scam industry, allowing criminal networks to further scale up their malign activities.
The evolving situation poses a direct threat to the national interests of Thailand, the U.S., Malaysia and dozens of other countries across Europe, Africa and South Asia now targeted by Myanmar-based criminals. In Myanmar, the crime networks undermine democracy and governance, threatening the security of thousands of Myanmar nationals who fled to the Karen borderlands to escape military conscription only to find themselves dragooned into forced criminality.
The central figure in the current changes is a powerful warlord in Karen State little known outside of Myanmar, Saw Chit Thu. Chit Thu was long the commander of the Karen Border Guard Force (BGF), a semi-autonomous paramilitary unit that operated under the auspices of the Myanmar army. Although these criminal operations are run largely by Chinese bosses, Chit Thu’s BGF has been key to their presence in Karen State since they arrived in late 2016. The BGF facilitated access to land and provided security for the burgeoning scam cities that rose along the Moei River separating Myanmar and Thailand.
Criminal activity in the area surged dramatically last year after China succeeded in curbing Kokang-based scam operations that targeted Chinese citizens, which in turn pushed the crime groups into territory controlled by Chit Thu in Karen State and further south.
The result? Since April, the Karen BGF has taken advantage of Myanmar’s internal war against the military regime to slip from any army supervision and to deepen its criminal pursuits.
Rebranded as the Karen National Army (KNA) — although often still referring to itself as a BGF — Chit Thu’s group has expanded a network of forced-labor crime hubs in partnership with China-origin mafia groups and other criminal militias; smuggled fuel, electricity, telecommunications systems and other critical supplies from Thailand into Myanmar; and engaged in mass human trafficking, torture and gross human rights violations targeting victims lured from around the globe.
While some efforts to check this criminal activity have drawn international support, the Karen BGF/KNA has managed to sidestep law enforcement and fend off disruption by other armed groups in contrast to the Kokang BGF, which broke under combined pressure from rival ethnic armed organizations and Chinese authorities. Chit Thu’s scam zones, which reoriented their victimization away from China, now operate with impunity, laundering illicit profits to expand his business interests and reaping revenue from Chinese mafia groups that help him extend control over Karen lands.
Chit Thu’s strategy takes full advantage of the chaos and conflict that define Myanmar today.
Drawing a lesson from the abrupt fall of the Kokang BGF and foreseeing collapse of his BGF overlord — the Myanmar army — in Karen State, Chit Thu moved to insulate his empire from both Chinese wrath and the eroding army’s inability to guarantee security.
Recasting his BGF as the KNA suggested neutrality in the internal conflict between the regime and anti-junta forces. Large billboards warning that all foreigners engaged in “online business” must leave his primary scam cities around Myawaddy by October 31 signaled to the Chinese government that the Myanmar army and its BGF had a plan to address illegal activity. Both sides of the equation were designed to discourage resistance actors from an Operation1027-style offensive against scam compounds in the Karen lands, something they unsuccessfully attempted in April of 2023.
On the armed-action front, Chit Thu deployed his newly branded KNA into Myawaddy as the Karen National Liberation Army (KNLA), an ally of the anti-coup National Unity Government, began closing in on the military’s major military installation on the Thai border at the city. While it appeared his objective was to consolidate a KNLA victory, in reality Chit Thu sought to take control of Myawaddy on behalf of the military and preserve a rump army presence in the post, which controls most of Myanmar’s border trade with Thailand. The military is now beholden to Chit Thu’s KNA for its remaining presence on the Thai border. From Chit Thu’s vantage point, he has left the Myanmar army powerless to push the KNA/BGF to crack down on criminal activity no matter who demands it. Should Chinese pressure lead the military to turn on Chit Thu, the junta’s loss of Myawaddy would be complete.
Chit Thu has also paid close attention to propaganda efforts, engaging public relations consultants to advance a campaign to whitewash his criminal empire at Shwe Kokko. Campaign tactics include fake crackdowns on the scamming activity, the posters on the pending exile of online businesses, donations to local communities, and boasts that Chit Thu’s Chinese partner in the Shwe Kokko “resort,” She Zhijiang’s company Yatai International Holdings, engages in “responsible governance.” The promotion extols the virtues of Yatai crime boss She Zhijiang, even as he languishes in a Thai jail, and attempts to co-opt media outlets and humanitarian organizations to burnish the KNA’s image.
PR stunts have also included:
The reality could not be more diametrically opposed. Rather than seeking to push criminal actors out of Myawaddy, in August Chit Thu organized his second massive Buddhist prayer service to seek divine intervention for the return of Yatai criminal kingpin She Zhijiang to Shwe Kokko. Thousands of people from Myawaddy, including several hundred representatives of Chit Thu’s KNA appeared at the ceremony wearing t-shirts with Yatai’s logo and a photograph of She Zhijiang.
Also appearing at the ceremony were several dozen monks — illustrating how Chit Thu has managed to co-opt even religious figures into his illicit activities.
The BGF/KNA’s white-washing campaign extends to Thailand, where it is attempting to co-opt operations to rescue people escaping from scam centers where they are held against their will.
Under pressure from international law enforcement and Thai authorities to return foreign nationals trafficked into Myawaddy, the BGF/KNA has softened its practice of demanding ransom payments. They now also demand public acclaim in exchange for handing over trafficking victims, seeking to advertise the role the BGF/KNA has played in “facilitating rescues” — rescues from the very compounds they control. At the same time, they and aligned criminal militias continue to demand ransom payments for those they release more quietly. BGF/KNA actors have even attempted to infiltrate anti-trafficking conferences with an eye toward gaining legitimacy and providing more cover for continuing criminal activities.
Another flank of the BGF/KNA strategy has been the diversification of geographies. In addition to its involvement in the 20-plus scam zones along the Moei River the BGF/KNA has built new partnerships, most notably with its former militia counterpart the Democratic Karen Benevolent Army (DKBA), which has lately emerged as a major player in Karen State’s scam economy. At Three Pagoda Pass, 130 miles to the south of Myawaddy, a new DKBA-BGF scam hub has begun to house the same types of illegal activity, some of which has been moved out of Shwe Kokko to create the impression that Chit Thu is cleaning house. Closer to Myawaddy, scam centers in the DKBA territory including the Kyaukhat (Taichang) and Way Lay Compounds now offer a wide range of choices for scam syndicates exiting other zones in Laos or the Philippines, where crackdowns on scam operations are ongoing.
As for Yatai itself, the company clearly has no interest in reducing, let alone ending, its involvement in forced-labor scamming. In July, two months after Chit Thu erected his posters calling for the departure of criminal actors, Yatai launched a new online promotional video showing off Shwe Kokko’s infrastructure and advanced connectivity — powered increasingly by Starlink to evade internet shutdowns by Thai or Myanmar authorities. Meanwhile, key companies inside Yatai, including Yanchaoji, Zhongxin and Renheng Group, have rolled out new advertising campaigns to bring scammers into the zone, the latter promising minimum wages of 10,000 RMB a month plus a 20 percent bonus for “revenue” if a scammer brings in 500,000 RMB more a month in stolen funds.
Also central to Chit Thu’s widening criminal activity is the shifting postures of both China and the military regime. While the Chinese police took a hard line when cracking down in the May 2023-April 2024 period, this began to shift in April as China recognized for the first time that the Myanmar army might face defeat at the hands of resistance forces. Chinese state-owned enterprises and policy establishment figures began to call for China to focus more on the protection of its geo-strategic business interests instead of dealing “with only the single objective of cracking down on crime.”
The shift in China’s posture became even more apparent following the junta’s loss of its Northeastern Command and the city of Lashio in less than 40 days to resistance forces in early August. Following this setback, China began placing pressure on the Three Brotherhood Alliance and providing the military with unprecedented levels of support to prevent its further demise.
Three key developments from April-September 2024 characterize the shift.
First, China began openly working with and legitimizing the junta’s police force, giving it undeserved credit for the crackdown that took place in Kokang, and presenting junta Lieutenant-General Yar Pyae with a medal of honor from the China police for “outstanding contributions to the security of Chinese citizens.” This was most certainly a serious setback to Three Brotherhood Alliance, which was in truth primarily responsible for the return of 45,000 Chinese and some 4,000 other foreign nationals from Kokang to China late in 2023. China’s award to Yar Pyae effectively gave all credit for this to the junta.
Second is China’s invitation to the junta to high-level Global Security Initiative platforms, including the Global Public Security Cooperation Forum and the Xiangshan Security Forum. Through these multilateral initiatives, China has signaled that the Myanmar police deserve recognition, praising their efforts to crackdown on crime.
China’s decision to refocus its crackdown on crime in Myanmar to prop up the military regime is a significant setback for law enforcement efforts.
Third, China provided Myanmar police with new equipment and agreed to partner directly with Myanmar police to set up a joint police center.
Together these moves have seriously undermined efforts to crack down on criminal schemes hatched in Myanmar by awarding and legitimizing the perpetrators. Because of its apparent concerns about the collapse of the junta, China has abandoned the progress made last year against criminal kingpins in Kokang, and is now looking the other way, even openly aiding the Myanmar army’s support for Chit Thu’s criminal empire.
This has already profoundly accelerated criminal activity in other parts of the country with new players becoming involved in new scam centers in remote areas of central and southern Shan State and scam centers ramping up in Yangon’s empty hotels and office buildings.
China’s decision to refocus its crackdown on crime in Myanmar to prop up the military regime is a significant setback for law enforcement efforts. The U.S. and other key countries need to step in and address these issues, especially as Myanmar’s scam state pivots from swindling Chinese nationals and more toward snaring victims in the U.S. and elsewhere around the world.
Immediate steps could include: (1) A U.S.-Thailand partnership to secure Thailand’s border, providing robust support to cut off resources from Thailand to the scam centers and cooperation to indict the perpetrators; and (2) imposing sanctions on the Karen BGF and DKBA leaders, as well as other armed actors involved in the criminal activity. Meanwhile, China itself should look more closely at these developments and how its recent shift toward Myanmar’s military regime has undermined regional and even global security.