The U.S. government has sanctioned a major militia in eastern Myanmar, describing it as “a key enabler” of online fraud operations that are costing Americans billions of dollars per year.
In a statement yesterday, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) said that it had sanctioned the Karen National Army (KNA), along with the group’s leader Col. Saw Chit Thu, and his two sons, Saw Htoo Eh Moo and Saw Chit Chit, “for their role in facilitating cyber scams that harm U.S. citizens, human trafficking, and cross-border smuggling.”
Over the past five years, Myanmar, Laos, and Cambodia have become hosts to parasitic cyber scam operations of immense scale. Perpetrated mostly by Chinese criminal syndicates, these operations rely on a large indentured workforce – mostly ordinary people who have been attracted by promises of employment, only to be kept imprisoned and forced to operate various types of digital scams, often on pain of beatings, mistreatment, and torture.
According to the OFAC statement, these “sophisticated” frauds cost Americans more than $2 billion in 2022 and $3.5 billion in 2023.
“Cyber scam operations, such as those run by the KNA, generate billions in revenue for criminal kingpins and their associates, while depriving victims of their hard-earned savings and sense of security,” Deputy Secretary Michael Faulkender said in the statement. “Treasury is committed to using all available tools to disrupt these networks and hold accountable those who seek to profit from these criminal schemes.”
The KNA, which controls a large territory in Kayin (Karen) State along the border with Thailand, originated from a faction of the Karen National Union that broke away from the group in the mid-1990s under Saw Chit Thu’s leadership. The group then allied itself with the military junta of the time and, after enlisting as a Border Guard Force in 2009, turned to murky and criminal commercial activities, including online scams in recent years, to sustain itself.
According to OFAC, the KNA has “leveraged its former role as a Border Guard Force (BGF) with Burma’s military to facilitate a transborder criminal empire.”
The largest scamming operations are concentrated at Shwe Kokko, a development that Chit Linn Myaing Group, a firm closely connected to Saw Chit Thu, has developed in partnership with the Hong Kong-registered Yatai International Holding Group. Shwe Kokko initially focused on casinos and online gambling, but like other Chinese criminal operations based in the Mekong region, it has since diversified into digital scams.
“Under Saw Chit Thu’s leadership, the KNA has become a key enabler of scam operations in the region, providing security at compounds and leasing land to criminal organizations while profiting handsomely at the expense of scam victims and of the otherwise innocent people forced to carry out these crimes,” the statement alleged.
For similar reasons, Saw Chit Thu was last year sanctioned by the European Union, which said that his operations “entail serious human rights violations and are increasingly threatening the peace, security, and stability in the country and the region.” The United Kingdom sanctioned Saw Chit Thu in late 2023.
Last year, the BGF renamed itself the Karen National Army in order to distance itself from the military, but according to OFAC, these ties persist. Saw Chit Thu has also denied any involvement in scamming operations, and, as pressure from the Thai and Chinese governments has grown, has ordered a number of crackdowns that have seen thousands of people released from scamming centers in the KNA’s territory. However, most informed observers remain skeptical about the extent (and intent) of the crackdown.
The sanctions announcement reflects a growing concern in Washington about the human and financial costs of an industry that is one of the world’s largest criminal enterprises. On May 1, the Treasury Department’s Financial Crimes Enforcement Network identified Huione Group, a Cambodian financial institution, as a “primary money laundering concern” for its role in for its role in “laundering proceeds of cyber heists” carried out by the North Korean state and the profits of Southeast Asia-based scam syndicates. Huione has previously been described as “the largest illicit online marketplace in history.”
The sanctioning of the KNA and its leader is a welcome, albeit arguably belated move by the U.S. government. David Scott Mathieson, an independent consultant who works on Myanmar, wrote in a post on Facebook that the imposition of U.S. sanctions on Saw Chit Thu and his organization was “about time,” given that the group “has been rampaging along the border since 1994, burning refugee camps, murdering Karen civilians, running drugs, human trafficking and casinos and scam centers.”
Such is the scale and wealth of the scamming industry, however, that even the threat of being locked out of the U.S. financial system may have little substantial impact on the KNA’s fortunes. In 2018, OFAC announced sanctions on Zhao Wei, the Chinese gangster-overlord of the Golden Triangle Special Economic Zone (GTSEZ) in northwest Laos, for “engaging in drug trafficking, human trafficking, money laundering, bribery, and wildlife trafficking.” (The GTSEZ has since been credibly accused of involvement in online scamming operations, too.) But the listing has done little to slow the breakneck pace of development in the GTSEZ, where seven years on, high-rise apartments, hotels, and casinos continue to reach skyward.