UN Report Details Massive Scale of Southeast Asia’s ‘Scamdemic’

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UN Report Details Massive Scale of Southeast Asia’s ‘Scamdemic’

The region’s multibillion-dollar cyber-scam industry is being supported by “one of the largest coordinated trafficking in persons operations in history.”

UN Report Details Massive Scale of Southeast Asia’s ‘Scamdemic’

Panoramic view of the Golden Triangle confluence, where the borders of Myanmar, Thailand, and Laos converge.

Credit: Depositphotos

Yesterday, the United Nations Office and Drugs and Crime (UNODC) released a report that adds the small but growing corpus of literature on the cancerous cyber-scam operations that continue to metastasize across mainland Southeast Asia.

The UNODC report shines a light on the region-wide wave of digital criminality that has arisen in the Mekong region since the onset of COVID-19. At the time, the operators of existing illegal casino operations across the region advanced existing plans to to begin running online scams, which include various kinds of cryptocurrency frauds and romance-investment scams.

The majority of these industrial-scale operations are located in often Chinese-run special economic zones and other regulatory voids in Laos, Myanmar, and Cambodia. Some are also present in the Philippines and Malaysia. Aside from the billions that these scams leech from victims around the world, many have also relied on the mass “trafficking in persons for forced criminality,” to use UNODC’s term of art, which has been facilitated by the context of economic insecurity that accompanied the pandemic shutdowns.

The testimony from those who have escaped these compounds are invariably similar: jobseekers are lured with promises of legitimate employment, only to have their passports confiscated. They are then housed in fortified “scam compounds” – usually hotels, casinos, and apartment buildings, but also large purpose-built complexes – and forced to operate various types of digital scams, often under threat of beatings, mistreatment, and torture.

The report details the hitherto unprecedented scale of these scam operations, and their connections to transnational organized crime groups, often run by Chinese gangsters. The UNODC report cites estimates that there could be “at least 100,000 victims of trafficking for forced criminality” in one nation – Cambodia – alone. “If accurate,” the UNODC states, “these estimates of trafficking for forced criminality in Southeast Asia would suggest that this is one of the largest coordinated trafficking in persons operations in history.”

Similar figures were cited in a report last month from the Office of the U.N. High Commissioner for Human Rights, which stated that at least 120,000 people in Myanmar and at least 100,000 in Cambodia “may be held in situations where they are forced to carry out online scams.”

According to UNODC, this surge in criminality “has been driven by organized crime groups in the region, which operate in a remarkably open way.” The report adds that these groups’ illicit activities “are linked to various legal and illegal entertainment establishments, such as casinos, hotels, and registered companies (businesses), which operate from compound-like buildings where victims are harbored and forced to commit, or be complicit in, cyber-enabled crimes.”

Given the scale, the profits of organized crime groups have reached unprecedented levels, with the report estimating that the scam industry in one (unnamed) Mekong nation alone “may be generating between $7.5 and $12.5 billion” – around half the country’s official GDP.

According to UNODC, the main locations are those that have long hosted illegal activities. In Cambodia, most known operations have been concentrated in Sihanoukville, a port city on the country’s south coast, and around its borders, particularly in Bavet on its border with Vietnam and Poipet, on its border with Thailand.

In Laos, they center on the Bokeo province in the northwest, the home of the Golden Triangle Special Economic Zone, which is run by Chinese-born gangster-tycoon Zhao Wei, whom the U.S. government has sanctioned for “drug trafficking, money laundering, bribery, and human and wildlife trafficking.”

Perhaps the most expansive operations are now located in Myanmar, which provides uniquely fertile soil for criminality, given that it is “home to non-state armed groups that control important border areas and have a history of working with organized crime syndicates.”

Myanmar’s scam compounds are concentrated in two areas. The first is located in southeastern Myanmar near the town of Myawaddy on the Thai border – the location of the notorious Shwe Kokko development. The second is along the border between Shan State and China’s Yunnan province – particularly, three “special regions” – Wa State, Kokang, and Mong La – controlled by armed rebel groups with close links to China.

The report identifies a key distinction in Myanmar. Whereas Cambodia-based operations generally convert existing buildings, like casinos and hotels, for scam operations, Myanmar-based syndicates are building “large purpose-built structures” whose sole purpose is “providing the infrastructure for large-scale online scam and fraud operations.”

These compounds are “fortified to ensure that victims cannot escape,” including with metal bars on windows and balconies of offices and dormitories. Meanwhile, “armed guards with pistols, electric whips and handcuffs are positioned at the compound entrance.”

UNODC emphasizes the transnational nature of the challenge, and the ease with which operations can shut down and relocate jurisdictions. “Organized crime groups are converging in the region where they see vulnerabilities,” UNODC’s Regional Representative Jeremy Douglas said in a statement that accompanied by the report’s release.

While some crackdowns have taken place in Cambodia and the Philippines, Douglas said, these “have caused a partial displacement, and we have seen criminals moving infrastructure into places where they see opportunity – basically where they expect they will be able to take advantage and not be held to account, to remote and border areas of the Mekong.”

In the accompanying statement cited above, UNODC reported that it and senior officials from China and member states of the Association of Southeast Asian Nations (ASEAN) had finalized a strategic plan to respond to the region’s “scamdemic.” The plan, which will be will be tabled at the next ASEAN Senior Officials Meeting on Transnational Crime, “includes measures to improve preventive responses, the identification and protection of victims, and the capacities of law enforcement and criminal justice officials to investigate and cooperate.”

A coordinated approach to the problem is long overdue. The challenge, as a considerable body of reporting now substantiates, is that cyber-scam operations are often lubricated by the cooperation (or at least the passive acquiescence) of prominent businesspeople and government authorities – the very reason that the crackdowns so far have been so limited and partial. Unless local governments develop both the ability and the political will to throw their weight behind a regional fight, an end to the regional cyber-scam scourge will remain elusive.