Fraud factory

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Fraud factory in Shwe Kokko, Myanmar. Shwe Kokko Scam City, Myawaddy, Myanmar.jpg
Fraud factory in Shwe Kokko, Myanmar.

A fraud factory, fraud park or scam compound is a collection of large fraud organizations usually involved in human trafficking operations, generally found in Southeast Asia and usually operated by a criminal gang. Fraud factory operators lure foreign nationals to scam hubs, where they are forced into modern slavery, to scam internet users around the world into fraudulently buying cryptocurrencies or withdrawing cash via social media and online dating apps. [1] A typical scam is known as "pig butchering". Trafficked victims' passports are confiscated, and they are threatened with organ harvesting and forced prostitution if they do not successfully scam sufficiently. Fraud factory operations proliferated in Cambodia, Myanmar, Laos and other countries during the COVID-19 pandemic and were further aided by the civil war in Myanmar.

Contents

Nomenclature

The term fraud factory first appeared in a 2022 Sydney Morning Herald article about the Southeast Asian scams and human trafficking industry [2] and was coined by Jan Santiago of the Global Anti-Scam Organization (GASO), a victims advocacy group, in describing scamming operations in the region. [3] [4]

The term was used by Kenya's Ministry of Foreign Affairs for the activity of trafficking victims to Asia where they use digital media to meet westerners and sell them cryptocurrencies. [5] In Chinese, the term "fraud industrial park" (Chinese : 詐騙 園區 ; pinyin :zhàpiàn yuánqū; lit.'fraud park zone') has emerged in reference to these operations.[ citation needed ]

Organization and ownership

Fraud factories are often operated by Chinese criminal gangs based in Southeast Asia. [6] The gang's traditional revenue stream of gambling reduced during the COVID-19 pandemic and their activities increasingly focused on fraud factories thereafter to regain lost revenue. [6]

Human trafficking victims

KK Park, a fraud factory in Myawaddy, Myanmar. KKPark.jpg
KK Park, a fraud factory in Myawaddy, Myanmar.

Between August and late September 2022, the Kenyan embassy in Thailand facilitated the rescue of 76 trafficking victims. [5] The victims were mostly Kenyan, and included Ugandans and a Burundian. [5] The criminal gangs who operated the fraud factories had been targeting young and educated Africans. [5] In November 2022, one Kenyan died after a botched organ harvesting operation associated with a fraud factory in Myanmar. [7] [5]

Myanmar is also an emerging destination for international labour trafficking, especially along its border areas. [8] Victims in Myanmar include nationals from throughout Asia, including China, [1] Hong Kong, [1] India, [9] Indonesia, [1] Malaysia, [1] Nepal, [1] the Philippines, [10] Taiwan, [11] and Thailand. [12] Victims are lured by the false promise of high-paying jobs, and are trafficked through major cities like Yangon and Bangkok, and transit points like Mae Sot and Chiang Rai. [8] They are then forced to work in "special economic zones" along Myanmar's borders, such as Shwe Kokko. [8]

In late 2023, the United Nations Human Rights Office estimated that at least 120,000 people in Myanmar were trafficked there and are being held in online scam compounds. At least 100,000 people are being held in similar circumstances in Cambodia. Other operations were also being run in Laos, the Philippines and Thailand. [13] [14]

In May 2023, the Philippine Senate's Committee on Women, Children, Family Relations and Gender Equality conducted an inquiry into the proliferation of illegal activities involving foreign nationals, including human trafficking and racketeering, within scam hubs in various points of the archipelago. Senator Risa Hontiveros presented videos and reports of recent raids made by Philippine law enforcement agencies on a number of commercial and residential properties in Clark, Pampanga, that resulted in the rescue of 1,300 victims and the confiscation of over ₱180 million in cash. [15] By August, the committee discovered that many of these scam hubs had been "hiring" more locals than foreign nationals. [16]

In March 2024, more than 800 Filipinos and foreign nationals were rescued from a large scam hub in Bamban, Tarlac, after it was raided for alleged illegal activities that included crypto and love scams; the hub was legally registered as a Philippine Offshore Gaming Operator (POGO) firm. [17] In August 2024, another 162 foreign nationals were rescued from scam hubs in Cebu illegally operating as POGOs. [18] [19]

Operations

The Golden Triangle Special Economic Zone by the banks of the Mekong River Golden Triangle Special Economic Zone 10.jpg
The Golden Triangle Special Economic Zone by the banks of the Mekong River

In 2022, BBC News reported the locations of fraud factories as being in Laos and Myanmar, notably in Kachin where the Kachin conflict is occurring, a factor that makes rescues difficult. [5] In 2022, The Japan Times reported that factories which initially started operations in Cambodia later switched locations to Laos, and that victims were held in special economic zones in Laos and Myanmar, specifically in Myawaddy, as well as casinos in Cambodia, particularly in Sihanoukville. [6] [20] The trafficked victims are lured with job offers, with the BBC reporting one victim having traveled to Thailand for a job before being driven to Laos. [5]

Fraud factory workers are trained to create online social media and dating personas, which they use to build up trust with westerners and engage in fake romance scams, with the goal of encouraging the westerners to buy cryptocurrencies. [5] [6] The targets of the bait and switch cyber crime were predominantly US citizens. [5] The process of fraudulently building up trust with victims online in order to sell them cryptocurrencies is known as "pig butchering". [6]

The trafficked Kenyans were prevented from leaving unless they paid 1.2 million Kenyan shillings and were threatened with forced sex work and organ harvesting if they did not meet work performance targets. [5] Two victims who spoke to the BBC were rescued by Awareness Against Human Trafficking. [5]

Traffickers confiscate their victims' passports. Some trafficking victims have returned to Kenya with broken limbs, from beatings by their captors. [5] Vietnamese charity organization Blue Dragon reported that trafficking victims forced to work in scamming operations in Myanmar, are forced to sell their organs if they fail to meet quotas. [21]

During the Myanmar civil war, the Three Brotherhood Alliance launched Operation 1027 against the Myanmar military regime on 27 October 2023, with one of the intended goals being to eradicate scam centers in the Kokang Self-Administered Zone along the northeastern border with China, which had grown frustrated with the Myanmar government's lack of response against fraud factories. [22] [23] On 5 January 2024, the alliance fully captured the city of Laukkai in Kokang from the Myanmar military, and soon more than 40,000 people involved in Kokang's fraud factories were returned to China. [24] [25] [26] Analyst Jason Tower called their operation "extremely successful" in eradicating scam centers from Kokang, although some syndicates were able to move their operations to Cambodia, Laos, and Myanmar's Kayin State. [26] By March 2024, Brig. Gen. Zaw Min, a former Regional Operations Command (ROC) chief of Laukkai, was imprisoned by Myanmar's military government for his alleged role in online scam operations, and was later given a death sentence in July. [27]

In 2024, Rappler reported that many in the Philippine media as well as government had been unaware that a large number of scam hubs in the Philippines had been operating in the country under the legal cover of Philippine Offshore Gaming Operator (POGO) licenses that were issued by the Philippine Amusement and Gaming Corporation; although POGO licensees were first issued in 2003, they flourished during the presidency of Rodrigo Duterte. A 2024 congressional investigation of scam and trafficking operations by a Tarlac POGO hub led to the arrest of Bamban mayor Alice Guo and her alleged sister and sister-in-law, Shiela Guo and Cassandra Ong, as well as a manhunt for Duterte's former spokesperson, Harry Roque, who has been on the run after questions on his sudden wealth led to questions about his role in a Pampanga POGO hub, identified as Lucky South 99, that was also managed by Cassandra Ong. [28] [29] [30]

In March 2024, the head of Interpol estimated that the combined profits of Southeast Asian organized crime networks were $2 to $3 trillion per year, with a typical criminal organization making $50 billion per year. [31]

Defensive criminal actions

Scam compounds are able to continue operating even though their locations are known, by bribing local law enforcement and politicians. [32] As of 2024, organizations had allegedly harassed at least one researcher, using deep fakes to impersonate his father over phone and video chats, after stealing his phone number. [32]

Destinations

Sihanoukville, Cambodia. Panorama View of Sihanoukville from Otres Beach (cropped).jpg
Sihanoukville, Cambodia.

Cambodia, Laos, and Myanmar in Southeast Asia have been the most known fraud factory destinations. [9] These countries are particularly vulnerable due to their strategic location next to China and weak law enforcement. [33] Below are known cyber scam hotspots:

International reactions

United States Institute of Peace discussing industrial-scale scam compounds in 2024. United States Institute of Peace - 5 13 2024 Transnational Organized Crime in Southeast Asia (53720888903).jpg
United States Institute of Peace discussing industrial-scale scam compounds in 2024.

In November 2023, China issued arrest warrants for junta-aligned Ming Xuechang, and three other Ming family members for their involvement in online scamming operations. [35] Ming later committed suicide. The other three were captured by Burmese authorities and handed over to China. [36]

In August 2024, the secretary of the Philippines' Department of Migrant Workers said that Philippine authorities will "get the statements of the [Filipino] victims [of the fraud factories in Laos] to pinpoint who recruited them [...] in the Philippines and file the necessary charges.” [37]

See also

General:

Related Research Articles

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No More Bets is a 2023 Chinese crime thriller film directed by Shen Ao and produced by Ning Hao. The film chronicles a story about Chinese people being trafficked overseas to a Southeast Asian country and forced to commit Internet fraud. It features Lay Zhang, Gina Jin, Yong Mei, and Eric Wang. The film was released in China in both regular theaters and IMAX on August 8, 2023 and achieved box office success, earning a gross of over $500 million.

<span class="mw-page-title-main">Human trafficking in Cambodia</span>

In 2006, Cambodia was a source, transit, and destination country for human trafficking. The traffickers were reportedly organized crime syndicates, parents, relatives, friends, intimate partners, and neighbors.

In 2008 Vietnam was primarily a source country for women and children trafficked for commercial sexual exploitation and forced labor. Women and children were trafficked to the People’s Republic of China (P.R.C), Cambodia, Thailand, the Republic of Korea, Malaysia, Taiwan, and Macau for sexual exploitation. Vietnamese women were trafficked to the P.R.C., Taiwan, and the Republic of Korea via fraudulent or misrepresented marriages for commercial exploitation or forced labor. Vietnam was also a source country for men and women who migrate willingly and legally for work in the construction, fishing, or manufacturing sectors in Malaysia, Taiwan, P.R.C., Thailand, and the Middle East but subsequently face conditions of forced labor or debt bondage. Vietnam was a destination country for Cambodian children trafficked to urban centers for forced labor or commercial sexual exploitation. The country had an internal trafficking problem with women and children from rural areas trafficked to urban centers for commercial sexual exploitation and forced labor. Vietnam was increasingly a destination for child sex tourism, with perpetrators from Japan, the Republic of Korea, the P.R.C., Taiwan, the UK, Australia, Europe, and the U.S. In 2007, an Australian non-governmental organization (NGO) uncovered 80 cases of commercial sexual exploitation of children by foreign tourists in the Sa Pa tourist area of Vietnam alone.

Laos ratified the 2000 UN TIP Protocol in September 2003.

Laukkai is the capital of Kokang Self-Administered Zone in the northern part of Shan State, Myanmar. It is located east of the Salween River, which forms part of Myanmar's border with the People's Republic of China at its upper reaches. It is about 10 miles (16 km) away from Nansan, China. In Laukkai, Southwestern Mandarin and Chinese characters are widely used, and the Chinese renminbi is in circulation. It is the main town of Laukkaing Township of the Kokang Self-Administered Zone. It is 117 miles (188 km) from Lashio and 42 miles (68 km) from Kongyan. Its population is 23,435. Laukkai is notorious for its gambling, prostitution, human trafficking and online scams.

<span class="mw-page-title-main">Kokang Self-Administered Zone</span> Self-administered zone in Shan State, Myanmar

The Kokang Self-Administered Zone, as stipulated by the 2008 Constitution of Myanmar, is a former De facto self-administered zone in northern Shan State. The zone is intended to be self-administered by the Kokang people. Its official name was announced by decree on 20 August 2010. It is recognized as illegal by the Myanmar National Democratic Alliance Army (MNDAA).

Human trafficking is a major and complex societal issue in Myanmar, which is both a source and destination for human trafficking. Both major forms of human trafficking, namely forced labor and forced prostitution, are common in the country, affecting men, women, and children. Myanmar's systemic political and economic problems have made the Burmese people particularly vulnerable to trafficking. Men, women, and children who migrate abroad to Thailand, Malaysia, China, Bangladesh, India, and South Korea for work are often trafficked into conditions of forced or bonded labor or commercial sexual exploitation. Economic conditions within Myanmar have led to the increased legal and illegal migration of citizens regionally and internationally, often to destinations as far from Myanmar as the Middle East. The border regions of Myanmar, including Shwe Kokko, are known human trafficking destinations.

<span class="mw-page-title-main">Human trafficking in Southeast Asia</span>

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<span class="mw-page-title-main">Myanmar National Democratic Alliance Army</span> Ethnic insurgent group in northern Myanmar

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Bai Suocheng or Bai Xuoqian is a Kokang politician from Shan State, Myanmar. He was a former deputy commander of the Myanmar Nationalities Democratic Alliance Army who later became the MP of the Amyotha Hluttaw representing Laukkai and first leader of the Kokang Self-Administered Zone. In 2024 he was extradited to China for running online and telephone scam centres.

<span class="mw-page-title-main">Shwe Kokko</span> Place in Karen State, Myanmar

Shwe Kokko Myaing, commonly known as Shwe Kokko, is a town in Myawaddy Township, Myawaddy District in the Kayin State of south-east Myanmar. Shwe Kokko lies on the left (western) bank of the Moei River, facing Thailand to the east. The town is located 20 kilometres (12 mi) north of Myawaddy. In recent years, Shwe Kokko has evolved into an organized crime and human trafficking hub, due to the Burmese government's limited reach and oversight in this remote area. Chinese-led development projects in Shwe Kokko, including Yatai New City, have been involved in illegal gambling, human trafficking, extortion, and cyber scam operations. As Cambodia intensified its crackdown on illegal online gambling in 2019, Chinese crime syndicates and casino operators have found a new base in Myanmar's peripheral border areas.

<span class="mw-page-title-main">Philippine Offshore Gaming Operator</span> Online gambling service provider

Philippine Offshore Gaming Operators (POGO), renamed Internet Gaming Licensees (IGL) in October 2023, are firms operating in the Philippines that offer online gambling services to markets outside the country, with a significant portion catering to the Chinese market. POGOs began operating in the Philippines in 2003.

Sex trafficking in China is human trafficking for the purpose of sexual exploitation and slavery that occurs in the People's Republic of China. It is a country of origin, destination, and transit for sexually trafficked persons.

Sex trafficking in Myanmar is human trafficking for the purpose of sexual exploitation and slavery that occurs in the Republic of the Union of Myanmar. Myanmar is primarily a source and transit country for sexually trafficked persons.

Sex trafficking in the Philippines is human trafficking for the purpose of sexual exploitation and slavery that occurs in the Republic of the Philippines. The Philippines is a country of origin and, to a lesser extent, a destination and transit for sexually trafficked persons.

She Zhijiang, known as Tang Kriang Kai, and by numerous other aliases including She Lunkai, and Dylan She, is a Chinese Cambodian businessman. He is chairman of Yatai International Holdings Group, which has gambling investments throughout Southeast Asia, including Cambodia, the Philippines, and Myanmar. A convicted criminal in China, She Zhijiang was a fugitive until his capture by Thai police in August 2022. His business operations have been linked with human trafficking, extortion, and cyber scams.

<span class="mw-page-title-main">KK Park</span> Fraud factory in Myawaddy, Myanmar

KK Park is a fraud factory located in Myawaddy, Myanmar. Located next to the Moei River on the Myanmar–Thailand border, the complex is a major hub of Internet fraud and human trafficking within the larger Golden Triangle region.

A pig butchering scam, a.k.a. "Sha Zhu Pan" or Shazhupan,, translated as Killing Pig Game, is a type of long-term scam and investment fraud in which the victim is gradually lured into making increasing contributions, usually in the form of cryptocurrency, to a fraudulent cryptocurrency scheme. They are commonplace on social apps. In October 2023, 12% of Americans using dating apps had been victims, up from 5% in 2018. The scammer builds trust with the victim through online communication, subsequently persuading them to invest in a fraudulent cryptocurrency scheme. The "butchering" or "slaughtering" of the victim transpires when their assets or funds are stolen.

<span class="mw-page-title-main">Battle of Laukkai</span> 2023–2024 military offensive in Myanmar

The Battle of Laukkai was a military offensive conducted by the Myanmar National Democratic Alliance Army (MNDAA) encircling and capturing Laukkai, the capital of the Kokang Self-Administered Zone in northeastern Myanmar. The battle was part of the larger Operation 1027, a joint military operation conducted by the Three Brotherhood Alliance coalition of three ethnic armed organisations and part of the overall renewed civil war in Myanmar.

The Shwe Kokko Offensive was a failed offensive by Karen EAOs and the People's Defense Force on the city of Shwe Kokko.

References

  1. 1 2 3 4 5 6 Hunt, Luke (2023-02-07). "As Myanmar Coup Intensifies Regional Human Trafficking, How Will China Respond?". The Diplomat. Retrieved 2023-03-16.
  2. ↑ Southern, Lindsey Kennedy and Nathan Paul (2022-08-20). "The online scammer targeting you could be trapped in a South-East Asian fraud factory". The Sydney Morning Herald. Retrieved 2023-08-19.
  3. ↑ nikd. "The online scammer targeting you could be trapped in a South-East Asian fraud factory". Rock-Solid IT Services since 2003. Retrieved 2023-08-19.
  4. ↑ Farivar, Cyrus. "How One Man Lost $1 Million To A Crypto 'Super Scam' Called Pig Butchering". Forbes. Retrieved 2023-08-19.
  5. 1 2 3 4 5 6 7 8 9 10 11 12 "The Kenyans lured to become unwitting 'love' fraudsters". BBC News. 2022-11-26. Retrieved 2022-11-26.
  6. 1 2 3 4 5 Nagaraj, Anuradha; Wongsamuth, Nanchanok (2022-11-14). "Cyber criminals hold Asian tech workers captive in scam factories". The Japan Times. Retrieved 2022-11-26.
  7. ↑ Ministry of Foreign Affairs (Kenya) (16 Nov 2022). "16 November 2022 Tweet". Twitter. Retrieved 2022-11-26. Already one young Kenyan has died as a result of a botched operation by quack doctors operating in the Chinese run factories in Myanmar
  8. 1 2 3 Hunt, Luke (2023-02-07). "Focus on Human Trafficking Shifts From Cambodia to Myanmar". The Diplomat. Retrieved 2023-03-16.
  9. 1 2 ANI (2022-11-24). "Over 200 Indian victims of job rackets rescued from Myanmar: MEA". ThePrint. Retrieved 2023-03-16.
  10. ↑ "8 Filipino trafficking victims in Myanmar rescued – DFA". cnn. Archived from the original on March 14, 2023. Retrieved 2023-03-16.
  11. ↑ "3 Taiwanese back from Myanmar human trafficking hotspot arrested - Focus Taiwan". Focus Taiwan - CNA English News. Retrieved 2023-03-16.
  12. ↑ "Rescued human trafficking victims in Thailand nears record high". Reuters. 2019-07-22. Retrieved 2023-03-16.
  13. ↑ "ONLINE SCAM OPERATIONS AND TRAFFICKING INTO FORCED CRIMINALITY IN SOUTHEAST ASIA: RECOMMENDATIONS FOR A HUMAN RIGHTS RESPONSE" (PDF). Office of the United Nations High Commissioner for Human Rights. 2023.
  14. ↑ "'Hundreds of thousands' trafficked into SE Asia scam centres - UN". Reuters . 29 August 2023. Retrieved 30 June 2024.
  15. ↑ "Scam hub raids rescue over 1,300 victims". legacy.senate.gov.ph. May 30, 2023. Retrieved September 16, 2024.
  16. ↑ Ager, Maila (2023-08-02). "Rescued Filipino worker in Myanmar found in Pasay scams hub, senators told". INQUIRER.net. Retrieved 2024-09-16.
  17. ↑ GMA Integrated News (2024-03-13). "Over 800 Pinoys, foreign nationals rescued in Tarlac POGO hub allegedly behind scamming ops". GMA News Online. Retrieved 2024-09-16.
  18. ↑ Sitchon, John (2024-08-31). "162 foreigners rescued from illegal POGO hub in Cebu". RAPPLER. Retrieved 2024-09-16.
  19. ↑ "Philippine Officials Rescue 162 in Raid on Suspected Cyberscam Hub". thediplomat.com. Retrieved 2024-09-16.
  20. ↑ Ratcliffe, Rebecca (2022-10-09). "Sold to gangs, forced to run online scams: inside Cambodia's cybercrime crisis". The Guardian. ISSN   0261-3077 . Retrieved 2024-06-30.
  21. ↑ Agence France-Presse (30 November 2023). "Trafficking victims in Myanmar forced to sell organs – charity". The Manila Times.
  22. ↑ Butler, Gavin (15 November 2023). "Anti-regime forces promise freedom for trafficking victims as they move closer to taking Laukkai". Myanmar Now. Myanmar Now Ltd. Retrieved 27 June 2024.
  23. ↑ Gan, Nectar (19 December 2023). "How online scam warlords have made China start to lose patience with Myanmar's junta". CNN . Retrieved 27 June 2024.
  24. ↑ Myanmar Regime Raises the White Flag in Kokang Zone on China Border in Shan State 5 January 2024. The Irrawaddy. Archived January 18, 2024, at the Wayback Machine
  25. ↑ The Irrawaddy (29 January 2024). "Myanmar Junta Hiding Cyber Scam Bosses: Brotherhood Alliance". The Irrawaddy . Irrawaddy Publishing Group. Retrieved 26 June 2024.
  26. 1 2 Fishbein, Emily; Nu Nu Lusan (29 July 2024). "Under siege in Myanmar's cyber-scam capital". Al Jazeera . Retrieved 5 August 2024. According to Tower of the USIP, Operation 1027 was 'extremely successful' in eradicating scam syndicates from the Kokang territory and resulted in more than 40,000 people returning to China.
  27. ↑ The Irrawaddy (5 August 2024). "Ex-general attempts suicide while on death row for online scams role". Facebook . Meta Platforms, Inc. Retrieved 5 August 2024.
  28. ↑ Oliver, Cara Angeline (2024-06-05). "In the Public Square: POGOs and other scam hubs — what they do and how they do it". RAPPLER. Retrieved 2024-09-16.
  29. ↑ Go, Miriam Grace (2024-09-07). "[Closer Look] Drugs, POGOs, Quiboloy: Duterte's tyranny at the service of corruption". RAPPLER. Retrieved 2024-09-16.
  30. ↑ Subingsubing, Krixia (2024-09-15). "PNP manhunt on for Harry Roque". INQUIRER.net. Retrieved 2024-09-16.
  31. ↑ Southeast Asia human trafficking now a global crisis, Interpol says
  32. 1 2 Daniel Ackerman; Meghna Chakrabarti; Tim Skoog (April 3, 2024). "'Pig-butchering': The online scam that's raked in $75 billion and counting".
  33. ↑ Ratcliffe, Rebecca (2022-10-09). "Sold to gangs, forced to run online scams: inside Cambodia's cybercrime crisis". The Guardian. ISSN   0261-3077 . Retrieved 2023-03-16.
  34. 1 2 3 4 5 6 "Inside Southeast Asia's Casino Scam Archipelago". The Diplomat. 2022-08-02. Retrieved 2023-03-16.
  35. ↑ "Chinese Authorities Issue Arrest Warrants for Criminal Kingpins in Myanmar's Kokang Region". The Diplomat. 2023-11-13. Retrieved 2023-11-13.
  36. ↑ "China says ringleader in Myanmar telecom fraud committed suicide". Reuters. 17 November 2023.
  37. ↑ Rocamora, Joyce Ann L. (August 24, 2024). "PH eyes cases vs. recruiters of Filipinos rescued in Laos scam hub". Philippine News Agency. Retrieved September 16, 2024.
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