USIP report: Gambling scams in Southeast Asia, a growing threat to global security 

Jenny Ortiz 5 days ago
USIP report: Gambling scams in Southeast Asia, a growing threat to global security 

Southeast Asia has become a hotbed for transnational criminal networks, primarily originating from China. According to a recent report by the United States Institute of Peace (USIP), these activities are now a significant threat to global peace and security. 

The Epicenter: Myanmar, Cambodia, and Laos 

Myanmar, Cambodia, and Laos have emerged as central hubs for these illicit activities. Criminal networks have established scam compounds disguised as legitimate businesses, such as casinos and resorts. The USIP report revealed that these operations are supported by corrupt local elites and protected by armed groups, making them resilient against law enforcement efforts.  

“The resulting study illustrates how these networks have used their power and influence to develop a web of scam compounds within the region, centred primarily in Myanmar, Cambodia, and Laos, but involving most other countries of the region in the management of their operations and fraudulent proceeds,” the report said. 

Financial impact and human toll 

By the end of 2023, it is estimated that these criminal syndicates have stolen nearly $64 billion (€59.4 billion) worldwide. These networks have evolved from loosely regulated casinos and online gambling platforms in the 1990s into sophisticated operations fuelled by digital technology. 

Meanwhile, the human cost is equally alarming. Hundreds of thousands of individuals are trafficked and forced to work in these scam compounds. Many are lured by fraudulent job offers, only to find themselves trapped in prison-like conditions, compelled to execute online scams.  

“The scamming operations are powered by hundreds of thousands of people, many duped by fraudulent online ads for lucrative high-tech jobs and trafficked illegally into scam compounds, where they are held by armed gangs in prisonlike conditions and forced to run online scams,” the report said. 

Global financial implications 

Criminal networks have developed complex money-laundering schemes to integrate their illicit gains into the global economy. These schemes exploit vulnerabilities in financial systems across Southeast Asia and major financial hubs worldwide. The scale of laundering is vast, with significant investments in real estate and other assets in regions as far-flung as Europe and North America.  

“Such industrial-scale laundering is prolific throughout Cambodia, Laos, Malaysia, Thailand, and Vietnam and in financial hubs such as Singapore, Hong Kong, and Dubai.” 

China’s complicated role 

China’s stringent anti-gambling laws have pushed its organised crime networks into Southeast Asia. Despite efforts by Chinese law enforcement to curb these activities, the relationship between Chinese state actors and these criminal networks remains complex. While Beijing attempts to crack down on gambling and fraud, it appears to leverage these networks for strategic geopolitical gains, particularly in countries aligned with China’s Belt and Road Initiative.  

“The relationship between these criminal groups and the Chinese government is a confusing complex of mixed incentives and mutual opportunity,” the report stated. 

Impact on the United States 

According to the report, the US is one of the largest victims of these scams, with losses estimated at $3.5 billion (€3.2 billion) in 2023 alone. The US Department of Justice has recently indicted individuals for laundering scam profits, highlighting the reach of these networks into American soil. The threat extends beyond financial losses, undermining democracy and governance while compromising US interests in a stable and free Indo-Pacific region.  

Policy recommendations 

The USIP report emphasises the necessity for a coordinated international response to dismantle these networks. Key recommendations include holistic international coordination, US government coordination, enhanced data collection, and public awareness campaigns. 

Upcoming SiGMA event: SiGMA East Europe 2024, 2 – 4 September. Find all the details here. 

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