UNODC report: Transnational Organized Crime continues to thrive due to ASEAN’s disorganized and reactionary response

BANGKOK, THAILAND: In a recently published policy report, the United Nations Office on Drugs and Crime (UNODC) has strongly criticized the responses to the issue of trafficking in persons for forced criminality in Southeast Asia, characterizing them as disorganized and reactionary, lacking a systematic and well-coordinated approach.

These sporadic responses have proven ineffective in dismantling the Transnational Organized Crime groups engaged in these criminal activities. Despite previous efforts, these syndicates have persistently operated and thrived, as highlighted in the report.

Released on Tuesday (26 Sep) under the title “Casinos, Cyber Fraud, and Trafficking in Persons for Forced Criminality in Southeast Asia,” the UNODC report sheds light on the rapid expansion of the online casino and gaming industry, especially in high-risk areas of the Mekong region, notably Southeast Asia.

The ad-hoc measures taken by countries like Cambodia and the Philippines have led to a partial displacement of organized crime groups, which have relocated their operations, particularly to regions within Myanmar. This shift has become notably prominent.

The onset of the COVID-19 pandemic accelerated the trend of online betting and gambling, with a significant increase in online betting platforms and the use of cryptocurrency payments.

Technological advancements, such as mirror websites and third-party betting software, have made it easier to establish online casino operations with minimal technical expertise and capital, regardless of gambling laws in a given jurisdiction.

China’s enforcement actions against cross-border gambling

In 2020, Chinese authorities arrested over 75,000 suspects involved in illegal cross-border gambling, with at least 600 extradited to China with the cooperation of local authorities in Cambodia, Malaysia, Myanmar, the Philippines, and Vietnam.

Chinese authorities also reported the dismantling of more than 2,260 online betting platforms and 1,160 betting promotion platforms in 2020, along with the closure of around 1,960 illegal payment platforms and underground banks while handling over 3,500 cross-border gambling cases.

In 2022, Chinese police investigated over 37,000 cases related to cross-border gambling.

There is clear evidence of a well-defined operational plan by these organized crime groups, which includes the recruitment of victims, execution of scams and fraud, and money laundering.

The fact that new scam compounds are continuously emerging in Southeast Asia points to the urgency of enhanced information sharing and responses to organized crime in the region.

Involvement of wealthy tycoon in illicit operations

The UNODC report sheds light on the key figures behind these criminal activities, with organized crime group leaders at the apex of the hierarchy, orchestrating these operations and forging alliances with government officials and affluent individuals.

They are responsible for the overall strategy and alliances with government officials and wealthy individuals.

The report underscored that some wealthy individuals have been implicated in cases of online scams, fraud, and trafficking in Southeast Asia. They may be involved in funding or supporting these illicit operations.

For example, a Chinese billionaire, She Zhijiang, was arrested in Thailand in 2022 and accused of running major online gambling rings across Asia, including Hong Kong, China; Taiwan PoC; China; Malaysia; Vietnam; and other countries.

Additionally, the report delves into the roles played by various key actors within these criminal operations.

They are: “scam directors” responsible for daily operations, controllers who manage trafficking victims through coercion, agents handling victim transportation and releases, recruiters convincing victims to participate, and recruitment agencies serving as intermediaries.

Transporters guiding victims across borders, and models serving as the face of scam calls, at times falling victim to exploitation themselves.

Locations of the scam compounds

The locations that are clearly hubs for online scams and fraud, and trafficking for forced criminality, are mainly in Cambodia, and Myanmar, as well as Lao PDR.

In Cambodia, the majority of scam compounds are concentrated in Sihanoukville and Phnom Penh, with notable complexes like the ten-skyscraper facility in Otres.

Other reported scam sites include Kandal, Phnom Penh, Koh Kong, Poipet, Pursat, and Kampot.

In response to increased media scrutiny and intense bilateral pressure from other Southeast Asia countries whose citizens were affected by trafficking for forced criminality, Cambodia launched a ‘crackdown’ on the scam operations in September 2022.

The stated objective was to effectively close down illegal online scam and fraud operations and secure the release the trafficking victims

The crackdown seems to have also led to organized crime operations spreading to other parts of Cambodia. Since late 2022, recruitment advertisements began listing new destinations, including Oddar Meanchey, O’Smach, and Pursat province.

In Myanmar, scam compounds are primarily located in Wa State, Myawaddy, Laukkaing Township, Kokang Shan State, and various other regions.

These compounds often inhabit casinos, resorts, hotels, office buildings, and residential developments.

They are fortified with measures like metal bars on windows and armed guards equipped with weapons and restraints to prevent victim escape and unauthorized entry.

Unlike Cambodia, in Myanmar, purpose-built structures are being constructed specifically for large-scale online scam and fraud operations, making it challenging to intervene and assist victims in more remote regions.

Figure 2: Locations of casinos and scam centres in Cambodia, Lao PDR, and Myanmar

Note: The present map depicts locations of known casinos, reported or raided compounds related special zones in Cambodia, Lao PDR, and Myanmar as reported by regional law enforcement authorities and may be subject to change given the evolving situation an ongoing law enforcement operations. Numerous other compounds have been reported by regional law enforcement but have not included as they remain under investigation. (Source: UNODC)

How ‘scam park’ bosses generate enormous profit

The UNODC report sheds light on how organized crime groups operating within the realm of online scams, encompassing investment scams, cryptocurrency fraud, and illegal gambling, primarily pursue financial gains.

According to the report, scam operations in one Southeast Asian country are estimated to generate a staggering US$7.5 and US$12.5 billion, or half the value of that country’s GDP.

“One group of trafficking victims can generate hundreds of thousands of US dollars in a week for traffickers,” the report noted.

Trafficking victims contribute significantly to these profits, generating hundreds to thousands of US dollars daily for the criminal groups.

Victims of online scams and fraud may lose varying amounts, with some individuals reporting losses in the millions of US dollars.

Organized crime groups also profit through extortion by demanding ransoms from victims’ families, ranging from US$3,000 to USS$30,000. Ransom amounts have seen a significant increase in Myanmar in 2023.

Furthermore, criminal groups profit from the sale of trafficking victims to other scam compounds or criminal organizations for various forms of exploitation.

These illicit proceeds are reinvested in criminal activities and may involve investments in advanced technology such as AI.

Criminal organizations also use these profits to bribe government officials and private sector actors, ensuring their operations remain relatively undisturbed and legitimized.

The remaining illicit profits are laundered through money transfers, legitimate businesses, and various investment avenues like cryptocurrency and properties, further undermining the rule of law and financial systems while strengthening criminal groups’ influence as significant investors in the region.

Comprehensive blueprint for combating organized scam crime in Southeast Asia

The UNODC policy report offers a comprehensive set of recommendations aimed at tackling the multifaceted challenges posed by organized crime in Southeast Asia.

These recommendations encompass a range of critical actions, including the creation or updating of bilateral Memoranda of Understanding (MOUs) to effectively address the evolving nature of trafficking in persons for forced criminality.

To bolster victim rescue mechanisms, the report advocates the replacement of ad hoc rescue processes with standardized agreements designed for the initial identification and release of victims.

The UNODC further emphasizes the necessity of ensuring that all individuals who manage to escape or are released from scam compounds undergo a thorough victim screening process.

The report underscores the importance of providing immediate protection and support to presumed victims.

In addition, the report proposes the establishment of specialized units at the national level to coordinate responses to organized crime. It also encourages collaboration with technology companies to enhance investigations and address the evolving nature of criminal activities in the digital age.