How Myanmar Became a Global Center for Cyber ​​Scams

Several Southeast Asian countries have become global hubs for cyber fraud, as organized crime groups have expanded their operations in the region amid civil war in Myanmar and generally weak governance in the countries. neighbors, such as Cambodia. Criminal networks defraud hundreds of thousands of victims in countries across the region and beyond. As China and some Southeast Asian governments attempt to crack down on these centers, criminal operations could continue to evade law enforcement as they roam the region.

What are these cyber scam centers?

Several well-connected organized crime groups, mostly from China, operate cyber scam hubs across Southeast Asia, primarily in the poorer states of Cambodia, Laos and Myanmar. Their scams usually aim to unwittingly defraud victims around the world out of their savings. Many organized crime groups came to these countries after Beijing launched an anti-corruption campaign against illegal cross-border gambling and money laundering in Macau, a special administrative region of China on its southern coast. (Although casinos are illegal in mainland China, those just across the border in China, as well as in Macau, have long served as sources of profit, tools of money laundering and bases for other illegal activities for organized crime groups.)

The centers house thousands of people, most of whom are victims of illegal trafficking and forced to work in inhumane and abusive conditions. The United Nations High Commissioner for Human Rights estimates that more than two hundred thousand people have been trafficked to Myanmar and Cambodia to commit these online scams. Trafficking networks would extend far beyond the region [PDF]attracting victims from countries including Brazil, Kenya and the Netherlands.

How do scams work?

Trafficked workers typically contact their victims – most of whom reside in the United States or China – through text messaging applications or online and engage in elaborate attempts to develop close relationships with them and scam them into fraudulent investments, such as fake cryptocurrencies. This scam is commonly known as “pig butchery”, which refers to the fattening of a pig before slaughter. A recent study found that between 2020 and 2024, victims worldwide lost approximately $75 billion to cyber scams based in Southeast Asia. In the United States, Americans lost an estimated $2.6 billion in 2022 to hog slaughter and other cryptocurrency fraud, according to the FBI.

Why are these scam centers proliferating in Myanmar?

Crime syndicates have thrived along Myanmar's borders with China, India, Laos and Thailand, areas dominated by a collection of ethnic minority groups that have historically sought greater autonomy from the majority Bamar , or Burmese, in power. Tensions between the central government in Naypyidaw, the country's capital, and ethnic minority armed organizations flared following the 2021 military coup, which toppled the elected, quasi-democratic government.

After the junta returned to power, various ethnic armed groups, many of which had been fighting the Myanmar military for decades, joined forces with new armed organizations composed mainly of Burmese people. Together, they try to overthrow the junta. Amid this power struggle, scam hubs have flourished, as some armed, junta-affiliated ethnic groups profit from informal taxation of these illicit industries.

How has China responded to scams in Myanmar?

The rise in scam centers in Southeast Asia has changed China's role in Myanmar's civil war and its relationship with the military government, as many of the cyber scams and trafficking victims are Chinese citizens. Beijing has generally supported Myanmar's junta to safeguard its Belt and Road infrastructure projects in the country and to prevent fighting or population displacement from spreading into China's Yunnan province. But the junta's failure to crack down on scam hubs, along with the growing victimization of Chinese citizens, has changed China's calculus.

In late October 2023, three ethnic insurgent groups successfully coordinated an attack on the Myanmar military in northeastern Shan State. To justify the launch of the offensive, ethnic armed groups said they would eliminate scam hubs along the Sino-Myanmar border, accusing the junta of tolerating and profiting from the industry. Experts say China gave tacit approval to the attack, suggesting Beijing is willing to allow temporary instability on its border if it stops human trafficking and fleecing its citizens. Chinese law enforcement is pressuring local ethnic militias to hand over Chinese nationals and shut down fraud centers. Since the counter-offensive, China has repatriated more than forty thousand citizens [link in Chinese]according to state-backed media.

What are other governments doing?

As China continues its crackdown by repatriating scam kingpins and victims of human trafficking, some criminal syndicates have moved their businesses to Myanmar's eastern region of Karen State, which borders Thailand. Thailand accepted the military junta under previous governments, and crime syndicates depend on access to electricity and telecommunications in Thailand to operate. However, some experts suggest that Thailand's current Prime Minister, Sretta Thavisin, is increasingly focusing on the national security challenge that Myanmar's fraud centers pose to Thailand. In March 2024, Thailand contributed to a joint operation to repatriate nearly a thousand Myanmar citizens to China.

The United States, Canada and the United Kingdom imposed coordinated sanctions in December 2023 against individuals and entities involved in these scams, which followed previous sanctions imposed shortly after the 2021 coup. to cut off other sources of income for the Myanmar military, such as oil. and the gas industry. At the same time, US authorities have taken action in some individual cases by seizing the assets of those profiting from crypto scams. In one case, the Justice Department seized $9 million in crypto, disrupting the financial infrastructure of the fraudulent network.

In 2023, the US State Department released its latest report on human trafficking, and its chapter on Burma (Myanmar) documented cyberscam abuses in the country. Its findings serve as evidence for the United States to deny non-humanitarian foreign aid to countries complicit in human trafficking – a tactic the United States has already implemented in Myanmar, but not in other neighboring countries complicit in human trafficking, such as Cambodia. Experts say cutting U.S. aid is one way for Washington to combat human trafficking.

What should policymakers expect next?

The future of fraudulent operations in Myanmar is uncertain, particularly given the transnational nature of the problem and the uncertainty of the country's civil war. Experts warn that these criminal enterprises are highly mobile and can easily evade enforcement by dispersing their operations across borders. “Unfortunately, law enforcement responses have been largely contained within national borders,” says Jason Tower, country director for Myanmar at the U.S. Institute of Peace.

Some experts say that as China continues its efforts to protect its own citizens from scams, the operations will likely claim even more lives in the West. Washington will need to step up its international collaboration, including raising this issue with China – as it has with its policy approach on fentanyl – to effectively protect American citizens from these scams in the near future, Tower says.

Recommended Resources

The Preventive Action Center is monitoring the civil war in Myanmar.

In this report from the U.S. Institute of Peace, experts examine the global scale of cyberscam networks and provide policy recommendations to counter their harmful effects.

This 2023 report from the U.S. Department of State highlights Myanmar's failures to combat human trafficking and provides policy recommendations.

In this original investigative report, Reuters journalists Poppy McPherson and Tom Wilson uncover millions of dollars linked to cyber scams against representatives of well-connected Chinese and Thai business groups.