Cyberfraud in the Mekong reaches inflection point, UNODC reveals
'We are seeing a global expansion of East and Southeast Asian organized crime groups,' said Benedikt Hofmann, UNODC Acting Regional Representative for Southeast Asia and the Pacific. 'This reflects both a natural expansion as the industry grows and seeks new ways and places to do business, but also a hedging against future risks should disruption continue and intensify in Southeast Asia.'
The report, titled Inflection Point: Global Implications of Scam Centres, Underground Banking and Illicit Online Marketplaces in Southeast Asia, is part of a series of regional threat analyses and policy briefs produced by UNODC.
The infamous scam compounds dotted around special economic zones, or SEZs, and other border areas across the region, and especially in Cambodia, Lao PDR, Myanmar and the Philippines, are now being displaced as a response to mounting law enforcement pressure, leading to a spillover into other parts of the region. While crackdowns disrupt existing operations, these continuously reappear in other purpose-built business parks developed to house and service more online crime operations. The venues and businesses feature all of the conditions, infrastructure, and regulatory, legal, and fiscal covers required for sustained growth and expansion.
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"It spreads like a cancer," Hofmann said. "Authorities treat it in one area, but the roots never disappear; they simply migrate. This has resulted in a situation in which the region has essentially become an interconnected ecosystem, driven by sophisticated syndicates freely exploiting vulnerabilities, jeopardizing state sovereignty, and distorting and corrupting policy-making processes and other government systems and institutions."
The dispersal of these sophisticated criminal networks within areas of weakest governance has attracted new players, benefited from and fueled corruption, and enabled the illicit industry to continue to scale and consolidate, culminating in hundreds of industrial-scale scam centres generating just under US $40 billion in annual profits, according to latest UNODC estimates.
Criminal groups' continued success is fueled by their capacity to launder money through cryptocurrencies and underground banking, amassing massive amounts of criminal proceeds that infiltrate banking systems globally. As illicit actors from the region and beyond become leaders in cyber-enabled fraud, money laundering and underground banking in global markets, the repercussions are felt worldwide.
Global footprint
The trend to hedge beyond the region has been consistent with continued reports of crackdowns targeting Asian-led scam centres that have been found operating in Africa, South Asia, the Middle East, and select Pacific islands, as well as related money laundering, trafficking in persons, and recruitment services discovered to go as far as Europe, North America, and South America.
Many of these groups have managed to take on industrial proportions by reinvesting their profits and leveraging vast multi-lingual workforces comprised of hundreds of thousands of trafficked victims and complicit individuals — the results of which could be seen during the first few months of the year in Myanmar's Myawaddy, where thousands of people were stranded after being released from scam centers operating in the border areas.
Involvement of criminal groups from other parts of the world is also growing, the new study shows, revealing not only an expansion and acceleration of cyberfraud operations, but also new interlinkages between illicit actors, service providers and innovators within and beyond the region.
Cyber-enabled fraud, underground banking and technological innovation
Shifting threats associated with this expansion is the way criminal groups are evolving into wider cyberthreat actors. New online markets, money laundering networks, stolen data products, malware, AI, and deepfake technologies, among others, are laying the ground for the rise of crime-as-a-service. The phenomenon is fueled by new illicit online marketplaces where actors can freely convene and conduct their businesses online, adopting sophisticated technological innovations that allow them to adapt to crackdowns.
'The convergence between the acceleration and professionalization of these operations on the one hand and their geographical expansion into new parts of the region and beyond on the other translates into a new intensity in the industry — one that governments need to be prepared to respond to,' Hofmann said.
What next?
The report includes recommendations for governments in Southeast Asia and beyond to shape response strategies. These go from intensifying financial disruption measures, enhancing coordination on financial intelligence, all the way to scaling financial investigations and asset recovery through regional and international collaboration.
This latest report is part of a growing body of threat analyses conducted by UNODC on transnational organized crime in Southeast Asia. Findings of these reports have been presented to policymakers, law enforcement agencies, international partners, academics, and other experts, with the objective of fostering dialogue and advancing efforts to address organized crime more effectively.
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But large-scale mining only began three years ago, when a middle-aged Chinese man known to villagers as 'Mr Xi' began striking deals with smallholders to dig on their land. He promised compensation that did not materialise, villagers said. But attempts to protest have had little effect. Runoff from the gaping pits on the mountaintops is killing crops. Every week, it seems, cattle downstream of the mine's cyanide pools drop dead, locals say. 'Everything you see here, that hill and that hill and that one. … Everything you see that is stripped land is the Chinese,' said Sabuddin, a local villager. Wearing a long-sleeved shirt that hung loose on his scrawny frame, Sabuddin, 49, who like many Indonesians goes by only one name, stood perched on a jagged bluff. He said he did 'rakyat' mining, working with a hammer and pickax. He dug sometimes in areas like this one, which Chinese operators had excavated and then abandoned, Sabuddin said. But he had never mined for the Chinese. 'They work illegally,' he explained. 'I don't want to be involved in all that.' Yet, looking across the jungles he'd trekked through as a boy, he sometimes felt a sense of awe at the scale of the Chinese operation, he said. He pointed out a building with zinc roofs on the opposing crag – a dormitory for workers who guard the illicit mine. Even when night falls, the lights in those buildings don't turn off, he said. The crushers keep whirring; the excavators keep inching forward. Locals couldn't run an operation like this, Sabuddin said. 'No,' he continued. 'Only the Chinese.'
