The substantial impact of organized crime originating from China and operating in Southeast Asia on global security underscores the expansion of transnational criminal networks involved in illegal online gambling and sophisticated scams. It is estimated that these networks pilfer around $64 billion annually.

Key Points

• 🚨 Transnational Crime Threatens Southeast Asia: Transnational crime groups in Southeast Asia pose a significant threat to regional stability and global security. These groups are involved in various illicit activities, including drug trafficking, human smuggling, and money laundering.
• 🌎 China-Originated Crime Groups: Transnational crime groups originating from China are particularly concerning due to their reach, power, influence, and wealth. These groups are expanding their operations and posing a growing threat to global security.
• 🏛️ Corrupt Regimes Supported by Criminal Groups: Criminal groups in Southeast Asia often support corrupt and dangerous regimes, such as those in Myanmar and North Korea. This support undermines regional stability and poses a direct threat to peace and security.

The criminal operations involve the exploitation of forced labor, money laundering, and co-option of local elites to conceal their activities. The text emphasizes the nexus between weak governance, conflict, and the expansion of criminal networks.

China’s strict anti-gambling laws have driven organized crime groups to Southeast Asia to take advantage of the lucrative market and align with local elites for protection from Chinese law enforcement. Despite Chinese police crackdowns on illegal online gambling, fraud, and money laundering, these crime groups maintain close relationships with members of the Chinese Communist Party and partner with various Chinese state actors, including businesses, party agencies, and quasi-governmental institutions.

• Southeast Asia has become a major hub for transnational criminal networks originating from China, conducting illegal online gambling and sophisticated scamming operations targeting millions of victims globally, with an estimated annual stolen funds value of $64 billion.
• The criminal networks in Southeast Asia, primarily centered in Myanmar, Cambodia, and Laos, operate within a web of corrupt and dangerous regimes, involving a wide range of criminal activities including forced labor, money laundering, and online scams, posing a direct threat to human and national security globally.
• The United States is a major victim of the Southeast Asian scamming industry, with annual financial losses mounting rapidly, necessitating a coordinated international effort to combat the transnational organized crime through robust data collection, public awareness programs, and coordinated law enforcement actions.

The Transnational Crime in Southeast Asia: A Growing Threat to Global Peace and Security report also outlines the intertwining of these criminal groups with state apparatus and the challenges posed to law enforcement. Furthermore, it addresses the involvement of Chinese-origin criminal groups and their impact on the US, emphasizing the need for international coordination to combat these networks.

The UN Office on Drugs and Crime reported that criminal scam revenue in Cambodia alone could exceed $12 billion annually. A study group estimated global revenue from pig-butchering scams to be $63.9 billion using a similar method. However, these calculations are based on victim-reported data and conservative labor force estimates, and do not include the full extent of human, political, financial, emotional, and psychological costs.

The scamming operations are carried out by hundreds of thousands of people who are lured by fraudulent online ads for high-paying tech jobs and then trafficked into scam compounds. They are held captive by armed gangs and forced to run online scams. Victims of forced labor, along with some willing participants, come from over 60 countries.

In Myanmar, the scam compounds are protected by armed border guard forces linked to the military or its allies. In Cambodia, empty casinos and hotels, a result of the COVID-19 pandemic, have been repurposed for online scams. In Laos, special economic zones like Zhao Wei’s Golden Triangle SEZ are the primary centers for criminal activities.

How technology facilitates scamming and money laundering

The web page provides an in-depth analysis of how technology is used to facilitate scamming and money laundering in Southeast Asia. Here are the key points:

• Digital Platforms: Scammers use digital platforms like social media, online dating, and professional networking tools to target victims.
• Cryptocurrency: They direct victims to bogus investment platforms and move their money through crypto wallets, making transactions hard to trace.
• Money Mules: Criminals use “money mules” to provide customer information to exchanges, making it difficult for law enforcement to identify the scammers
• AI Technology: Advanced AI applications like Faceswap are used to defeat Know Your Customer protocols by stealing identities for fraudulent transactions.

These methods highlight the sophisticated nature of modern scamming operations and the challenges faced by investigators in tracking and prosecuting these crimes.

Law enforcement agencies worldwide face challenges in effectively utilizing blockchain technology to investigate financial crimes. There is a significant gap in knowledge between scammers and investigators, with law enforcement struggling to keep up while scammers maintain a dangerous advantage.

Telegram is widely known for being used by criminals to establish public groups for identifying each other, discussing business terms, and transferring cryptocurrency. For example, the Fully Light Company operates a Telegram group linked to the Kokang Border Guard Force in Myanmar, which also conducts scams in Thailand and Cambodia.

Despite the defeat of the border guard force in January 2024, the group still has over 100,000 members and generates over 200,000 posts per week related to money laundering. The illicit funds are now being moved throughout Southeast Asia through various legitimate businesses such as e-commerce platforms and foreign currency exchanges.

Effective international coordination is crucial in combating transnational organized crime, particularly in addressing online scamming networks. The involvement of key countries and international organizations, such as the United States and China, is essential to a successful response. Without coordinated efforts, criminal networks will take advantage of the gaps and continue their illicit activities.