Weak ASEAN Nations 'at Risk of Evolving Into Scamming States'

Organized crime gangs running scamming compounds in Southeast Asia are attracting such huge amounts of illicit funds it is transforming their economies, a top US analyst has warned.

“Industrial-scale” compounds set up in parts of Myanmar, Cambodia and Laos have been reaping billions from victims in more than 100 countries, according to Jason Tower, country director for Burma (Myanmar) with the US Institute for Peace.

A “massive wealth transfer” is being undertaken by transnational crime groups who have set up sophisticated online scams to trick people out of their savings, he said, with tens of thousands of people working in compounds on the Myanmar border opposite the Thai town of Mae Sot that are heavily guarded by a notorious pro-military Border Guard Force.

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Other smaller scamming hubs have been set up in border areas in Cambodia and a special economic zone in northern Laos where local governance is weak or co-opted by corrupt officials, Tower said.

“If you look at some of the numbers for Myanmar, Cambodia or the Mekong region more broadly, you’re seeing where the scam GDP [gross domestic product] – the amount that’s brought in by these online scams – has come to rival countries’ formal GDPs,” Tower said in a podcast about Southeast Asia’s scamming “crisis”.

“In Cambodia, you look at the numbers, [and] the scam economy represents roughly 40% of the country’s official GDP. So, this means it’s going to be very difficult to get consensus with ASEAN, or a strong crackdown on these issues.”

A report launched in July by a study group led by Tower and other experts such as Australian Professor Sean Turnell, said a conservative estimate of the funds stolen by scam syndicates last year was close to $64 billion.

In his podcast with the Strait Times, Tower said online scamming was now the “number-one form of crime in Singapore”, so police in the city-state were trying to devote more resources to counter the problem. And it was a similar problem in Malaysia, where each citizen had experienced an attempted scam 1.6 times a year, he said.

“If you look at the size of the scam economy and many of the countries, there’s a risk that they evolving into scamming states.”

Tower said the criminal networks involved in scamming, some of them Chinese, are “extremely well networked around the globe.” And they have allegedly been trying to set up new hubs in Africa and the Middle East.

“Dubai has started to emerge, and there’s been a lot of reports about Sri Lanka, [plus] a lot of reports about Uganda,” he said.

*A map by the Justice for Myanmar group shows scam centres on the Thai-Myanmar border*.

More compounds being built

Sources in Mae Sot have confirmed that scam centres are “booming”, and that new compounds are being built at Three Pagodas Pass, an isolated border town 230km south on the road to Kanchanaburi.

Meanwhile, Tower said the UN Office of Drugs and Crime convinced officials in Laos to crack down on scam centres in the Golden Triangle Special Economic Zone in August, run by Zhao Wei, a notorious Chinese businessman sanctioned by the US in 2018.

Tower said criminals at the Lao SEZ appeared to get advanced information that a crackdown was coming, so the “kingpins” were likely gone by the time law enforcement officials entered compounds.

But he welcomed the Biden Administration’s move last month to sanction a Cambodian tycoon and ruling party senator allegedly linked to human trafficking, plus forced labour in cyber and virtual currency scams at a casino resort near the Thai-Cambodian border.

The USIP wants the Biden Administration to impose sanctions on Karen Border Guard Force chief San Myint, known as Chit Thu (“Chit Too”; BGF image via RFA).

US sanctions were a good way of get banks to reassess if they want to do business with such individuals, Tower said. And now, the has called for sanctions to be imposed on Saw Chit Thu, the Karen “crime lord” who heads the Karen Border Guard Force in the Myawaddy region adjacent to Thailand.

“The evolving situation poses a direct threat to the national interests of Thailand, the US, Malaysia and dozens of other countries across Europe, Africa and South Asia now targeted by Myanmar-based criminals,” Tower said in a update late last week (Sept 26).

“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.

“Chit Thu’s group has expanded a network of forced-labour crime hubs in partnership with China-origin mafia groups and other criminal militias,” he said, alleging that they had “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.”

The scam crisis was so serious “states have to look much more closely at how social media is being used by criminal actors,” because crime groups were able to link up to thousands of people via WhatsApp and Telegram every day.”

The other way to limit the scams was greater regulation of crypto, Tower said, as that was how most victims’ savings were laundered.