United States Institute of Peace

The landscape is at once shifting, contradictory and murky. In Laos, for example, hundreds of individuals connected to scam centers were extradited to China after Laos police initiated patrols in the Golden Triangle area, one of the largest hubs of criminal activity in the region. Yet it remains unclear whether the crackdown is a symbolic, one-off operation or if it will evolve into a systematic effort to disrupt the crime groups. As USIP previously reported, China’s actions are also hazy. Last year in Myanmar, Beijing joined hands with anti-regime forces to sweep scam compounds run by Chinese gangs from the Kokang region; this year, China eased pressure on the country’s military dictatorship to uproot criminal enterprises elsewhere in apparent recognition that further demands on the Myanmar military could lead to regime collapse.

Over the past decade, Southeast Asia has become a significant hub for transnational criminal networks originating from the PRC. As international focus on this scam plague has escalated since May, when USIP issued a major report on the situation, the picture in the region has evolved significantly, both in the epicenter countries of Myanmar, Cambodia and Laos as well as other ASEAN states.

There have been new law enforcement campaigns and changing conditions within the countries involved; a rapid shift of targets by the scamming operations away from China and toward a global set of wealthy victims, including in the United States; a doubling down of state support for criminally-invested elites in Cambodia; and the dramatic expansion of criminal compounds in Myanmar’s Karen State, hosted by the Karen Border Guard Force and under the protection of the Myanmar military.

The analysis that follows captures recent developments on the region’s scam epidemic.

Myanmar. Scam operation centers have proliferated in recent months in new locations in Shan State, especially its interior towns of Wanhai and Tangyan. This troubling development stems from crime groups finding new homes after the virtual eradication of their compounds in Kokang, a town on the China border, by a combination of the armed resistance and Chinese law enforcement. Until earlier this year, Kokang was under the control of the Myanmar army.

Scam centers were also disrupted in territories controlled by the United Wa State Army (UWSA) starting in August 2023, after China pressured the militia to crack down on the activity. This move parallels what happened with drug production in the UWSA territory. Chinese pressure on the border over the past two-plus decades resulted in the migration of drug production to central Shan. These new scam hubs involve the Myanmar army, the UWSA and, concerningly, now also appear in territory controlled by the Shan State Army–North.

Amid widespread poverty caused by the junta’s disastrous mismanagement of the economy, scamming activity is also migrating to empty high rises in urban Myanmar where a small number of Chinese nationals were arrested for involvement in online scams earlier this year.

Cambodia. Online scam operations from around the region continue to relocate to Cambodia, where cybercrime is already a flourishing industry. This is mostly due to crackdowns elsewhere but is also a result of the Cambodian government’s sustained refutation of independent reporting on the issue as well as its condemnation of international enforcement measures, including sanctions — signals to criminals that the authorities will keep protecting their enterprises. The activity continues to spread across the country in dozens of large compounds and hundreds of smaller ones, generally owned by prominent local elites. New estimates by USAID’s Counter-Trafficking in Persons work suggest the coerced labor force now exceeds 150,000.

In July, a report from crypto-analytics firm Elliptic revealed the prominent role online marketplace HuiOne Guarantee plays in facilitating so-called pig butchering scams in which a victim is cultivated online and eventually fleeced of their assets. With transactions totaling at least $11 billion, HuiOne Guarantee operates as a hub for scam operators, offering services including money laundering, software development for fraudulent investment schemes, and even offers tools for controlling trafficked workers. UNODC also appears to reference HuiOne, using the moniker “BG-1” 20 times in its report released earlier this month on the industry.

Hours after Elliptic released its report, Cambodian government officials leapt to HuiOne’s defense. The head of Cambodia’s Committee to Counter Trafficking blasted the report as “baseless and intentionally tarnishing Cambodia’s reputation.” She did not specify which aspects of the analysis were unfounded or motivated by malice against Cambodia or its government.

In early September, the U.S. Embassy in Phnom Penh publicly acknowledged that Americans have lost at least $100 million to scams originating in Cambodia. Shortly afterward, the U.S. Treasury announced sanctions against Ly Yong Phat, a Cambodian senator and cabinet-level advisor to Prime Minister Hun Manet for his widely documented role in protecting and benefitting from scam compounds in Phnom Penh, Banteay Meanchey Province, and elsewhere. Numerous Cambodian ministries (over which the senator wields significant influence) quickly condemned the sanctions, casting them as politically motivated and leaving the unmistakable impression that scam syndicate operators are free to keep perpetrating these crimes in Cambodia with impunity.

On September 30, Mech Dara, one of the country’s few remaining independent journalists and the most prominent locally based figure investigating and raising awareness about Cambodia’s scam industry, was arrested and charged with “incitement to commit serious social unrest.” A Ministry of Information statement suggested that the charges are unrelated to his reporting on scams, but international observers have sharply questioned that claim. Dozens of embassies, press freedom groups, and local and international civil society actors have raised serious concerns about the likely retaliatory nature of charges.

Dara’s arrest follows two-and-a-half years of Cambodian authorities’ systematic elimination of independent, local reporting and activism on the issue. On October 24, Mech Dara was released on bail, but any local effort to gather information about organized crime now appears to be thoroughly neutralized.

Laos. In August, the Lao government initiated a crackdown within the Golden Triangle Special Economic Zone (GTSEZ), a notorious area for various illicit activities profiled in USIP’s May report. Lao and Chinese security forces detained 771 individuals and seized more than 2,000 electronic devices, including computers and mobile phones.

Although the Golden Triangle crackdown is a positive development, particularly in that Laotian law enforcement regained access to the GTSEZ, there are also several concerning features to its implementation.

First was the invitation by the criminal kingpin behind the zone, Zhao Wei, to all “businesses” inside the GTSEZ to a public meeting about three weeks before the raids, where he announced the crackdown was coming. That gave criminal kingpins and their senior compound managers ample time to relocate. Many of them shifted operations to Cambodia or the Myanmar border with Thailand, highlighting how these networks are intertwined across borders.

Second, following the initial crackdown, the GTSEZ management team — a company owned by Zhao Wei and his family that effectively governs the zone — gave tenants advance notice of future patrols, again handing criminals a wide opportunity to escape. Third, the crackdown made clear the deep involvement of the Myanmar United Wa State Army in the zone when it issued a public call for its personnel in the GTSEZ back to Myanmar.

It is unclear at this point (1) whether the crackdown was selective, having little effect on the remaining scam operators; and (2) whether the crackdown and patrols will continue or prove to be only the kind of temporary “campaign style” effort modelled elsewhere in the region. What is clear is that the activities of Zhao’s Kings Romans company will continue to challenge the enforcement efforts of the Lao government.  

Philippines. In a significant policy shift, Philippine President Ferdinand Marcos Jr. announced a ban on offshore gambling operations during his State of the Nation address on July 22. He specifically targeted the online gaming industry dominated largely by PRC nationals based in the Philippines. Marcos emphasized the need to curb the associated rise in criminal activities, including financial scams, money laundering and human trafficking, saying, "The grave abuse and disrespect to our system of laws must stop."

The statement received a standing ovation in Congress at a time when territorial disputes in the South China Sea are escalating tensions with Beijing. Senator Risa Hontiveros, leading an investigation into the alleged connections between Philippine Offshore Gaming Operators and organized crime, hailed the ban as a "victory for the entire nation." Currently, about 250 to 300 offshore gambling firms operate without licenses in the Philippines compared with 46 newly banned operators, raising concerns about the industry's impact on society and law enforcement).

In recent months, the saga of Alice Guo, the former mayor of Bamban, a municipality overwhelmed by online gambling, has captivated the Philippines as she faces criminal charges of money laundering, protecting online scam syndicates and being a Chinese spy. Guo, who continues to present herself as a patriotic Philippines national, suddenly disappeared in July. Following a manhunt across Southeast Asia, she was found and extradited from Indonesia in early September. Upon her return, Guo also faced charges of immigration fraud, with authorities bringing forward evidence that she is a Chinese national, that she fraudulently obtained a Philippines passport, and that she plays a key role in laundering funds for a criminal network exploiting workers trafficked for scams.

In late September, during initial hearings for Guo’s case, these concerns were significantly heightened: One of the region’s key criminal masterminds, She Zhijiang, gave an interview to Al Jazeera from a prison in Thailand in which he claimed that he and Guo were involved in a Chinese state-led conspiracy.

She is a professional scammer and conman, so his claims may be just a ruse to avoid extradition to China by making international observers think he can expose a Chinese state role in scam operations in Myanmar and the Philippines. What She’s comments clearly demonstrate, though, is the connectivity that criminal actors maintain across the region. Ironically, his claims are likely to prompt Philippine law enforcement to dig much deeper into his ongoing activities in Manila, where his Yatai IHG continues to operate one of the largest spas and nightclubs in Southeast Asia. This business has ties to several online casino operations in Newport City, including the Dingjiu casino, which openly advertises a partnership with Yatai.

Marcos has vowed to ensure justice, emphasizing the need to address deepening concerns over organized crime and its connections to foreign entities. Meanwhile, Philippine law enforcement has continued raids and investigations of suspected criminal compounds, especially following reports of a worrisome new trend in cyber-enhanced kidnapping for ransom.

Thailand. The country’s National Bureau of Telecommunications has taken action against organized crime by shutting down cell towers that serviced Karen State’s Myawaddy compounds, dealing a blow to the scam syndicates’ operational capabilities. Unfortunately, a continuing domestic political transition has slowed Thailand’s efforts, while criminal actors have simply managed to draw new cables across the border, challenging enforcement of the ban on cross-border telecoms.

Signal intelligence has revealed that compounds in Myanmar are pivoting to StarLink satellite systems using receivers smuggled through Thailand. This poses new challenges, given that StarLink is more broadly used in Myanmar for internet access and to relay information regarding the Thai-Myanmar borderlands. Any response must take this factor into account. Most problematic of all for Thailand’s response is that Thai Border Guard Forces are dramatically outnumbered and lightly armed compared with the Myanmar Army’s Border Guard Force and private security elements protecting the compounds. These forces continue to cross easily into Thailand’s sovereign territory on the border.    

Singapore. Police have continued to develop an Anti-Scam Center (ASC) in Singapore and to promote Singapore’s model to other countries. The ASC created a platform that facilitates collaboration among police, government agencies, banks and social media through which they can share information, freeze funds, raise awareness and filter out harmful content being spread online.

Singapore police say the ASC has helped curb online scams in the country since 2022, and the government’s advocacy for the ASC model is encouraging other countries to adopt its whole-of-government approach. However, one obstacle to a wider crackdown is proving hard to surmount: Most pig butchering scams are based on cryptocurrency and the ASC is yet unable to address that aspect of the crime. The ASC has been trying to set up a crypto-tracing unit but faces intense competition from the private sector for investigators with this skillset.

Recommendations

Despite the advances noted above, Southeast Asia’s scamming epidemic continues to rage. A major problem is the continued failure of authorities to systematically collect, share and publicize information on criminal networks, patterns of scamming and human trafficking. The deficit in evidence and coordination hampers law enforcement and public advocacy alike. While sanctions against a few high-level perpetrators are a useful step, much broader transnational accountability is urgently needed.

Fortunately, increased attention by international media is helping to alert the public to the dangers of online enticements for investments and dating. Official reinforcement, particularly from embassies of countries victimized by online scams, could amplify these messages in the media.

On the ground, increased funding must be allocated to curb trafficking and human rights abuses where they happen and supporting the beleaguered civil society actors on whose shoulders much of the response to date has rested. The resources currently dedicated to this criminal epidemic are woefully insufficient to the scale of the crisis.

And finally, looking ahead to 2025, the U.S. could expand engagement with ASEAN on these problems, particularly since Malaysia is likely to prioritize online scams during its year as ASEAN chair. In this regard, a whole-of-government task force led by the National Security Council or the White House directly would significantly enhance U.S. leadership in addressing this global menace.