Organized criminal groups from China operating on the Thai-Myanmar border are threatening internet users worldwide with online scams and financial fraud, using trafficked “cyber slaves” to carry out their crimes, according to a new report by the congressionally established United States Institute of Peace in Washington.
The groups have been pushed out of China by Chinese authorities and are now operating in bordering Southeast Asian countries such as Cambodia, Laos and Myanmar. Despite what is characterized by the report as a “global security threat,” little has been done to stop the growth of these criminal enclaves.
The online scams and fraud, which had been aimed at Chinese nationals, “are now targeting global audiences," USIP country director for Myanmar Jason Tower told VOA via Zoom.
Monday's USIP report titled, "A Criminal Cancer Spreads in Southeast Asia," states that the criminal organizations, which were once primarily involved in illegal online gambling, have now begun using a new form of fraud known as “pig butchering” or, in Chinese, “shazupan.”
These scams are referred to as “pig butchering,” Tower said, “because the aim is to fatten targets up before slaughtering them.” They are being “perpetrated on U.S. nationals, and people from across Europe, Japan, and many other countries around the world,” he added.
This type of scam originated in China, and involves building a deep, often romantic relationship with the victim online over time,” Tower explained.
“The scammer introduces some form of investment scheme, and continues tricking the victim by creating the impression that it is yielding large returns. Once the scammer has identified that the victim has committed all of his or her financial resources, the pig is slaughtered — I.e., the scammer disappears with the money, deeply harming the victim both financially and psychologically.”
In Myanmar, these scams are operated out of Shwe Kokko, a newly built town in Karen state, bordering Thailand, in what appears to be an autonomous development zone established over the past few years. According to the USIP report, there are “at least 17 distinct crime zones,” which “now provide an estimated 5 million square meters of criminal office space along a 31-mile stretch of the Moei River on the Myanmar border with Thailand alone."
The area is controlled by Chinese criminal investors in partnership with the Border Guard Force, or BGF, a Karen ethnic minority militia under Myanmar military control. “Not only Shwe Kokko … the whole area [is being] converted into a series of criminal enclaves,” Tower said.
Cyber slavery crisis in Shwe Kokko
The USIP report, co-authored by Priscilla Clapp and Jason Tower, describes how, after Chinese workers left the area and returned to Beijing during the COVID pandemic, criminal groups “lured jobseekers from around the world with attractive high-tech jobs,” before “trafficking them across borders into cyber slavery to work in financial schemes.”
“Many of these cyber slavery victims end up in Shwe Kokko,” Tower told VOA. They come from places like Thailand, Cambodia, Laos, Malaysia and Indonesia with the promise of well-paying jobs, but when they arrive, they find a much different situation.”
Shwe Kokko is a large illegal-gambling town on the Myanmar-Thai border initially developed by Yatai International Holdings, a group led by a “key Chinese criminal, She Zhijiang.” According to the USIP report, Zhijiang and other transnational criminals made alliances with the BGF, receiving “land and support” from the Myanmar junta-backed force. After Zhijiang’s arrest in 2022, the BGF had “control of a massive criminal empire, vastly increasing its wealth and power,” the report says.
“Initially, what this unholy alliance of the Border Guard Force and these Chinese criminal organizations were involved in doing was building cities to host illicit online gambling, and online fraud operations that targeted Chinese nationals largely back in China,” Tower said.
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“There are over 30 countries’ nationals who've been trafficked into that area along the Moei River,” Tower told VOA.
The Singapore-based Straits Times estimates that about 1,000 Malaysians are being forced to work in Shwe Kokko. The Indonesian Embassy in Yangon, with the help of locals, ransomed some Indonesians from the border town in May, according to the Indonesian Foreign Affairs Ministry.
Sources close to the Border Guard Force, who wish to remain anonymous for their own safety, told VOA that the 20 released Indonesian citizens paid a fee of about $8,500 each to the BGF for their release.
Eight Filipinos who were forced to work as cyber slaves were rescued in February, according to the Philippine Ministry of Foreign Affairs.
The men were recruited online to work in customer support in Thailand. “Instead… they were brought to Myanmar and were forced to trick individuals into investing in cryptocurrency,” the Philippine Ministry of Foreign Affairs said in a statement.
The trafficking victims are also children. A 16-year-old Burmese boy who worked in Shwe Kokko described his experience to VOA by phone. “There are numerous computer workshop buildings and approximately 200 employees per building in Shwe Kokko,” he said.
“I was required to work daily at the computer from 8 a.m. to 8 p.m. and perform online financial schemes at a set rate every day. If you are unable to complete the task at the specified rate, your pay will be reduced accordingly. We created fake online shopping websites such as Amazon and Shopee to defraud and steal from online shoppers. We also created online games to deceive and extort players,” he said.
China chooses wrong partner
“China’s role is two-fold … both on the perpetrator side, as well as the victim side,” Tower said. “China has been involved in a crackdown on some of these criminal networks now for about two decades. So, you've seen largely PRC-affiliated transnational criminal actors pushed out of China, yet able to continue perpetrating crimes in other jurisdictions.”
China has said that they have been working with the Myanmar junta to address criminal activities in the border areas. On May 2, Chinese Foreign Minister Qin Gang visited Myanmar and met the junta Senior General Min Aung Hlaing in the capital, Naypyidaw.
According to a post on the website of China's Foreign Ministry on the day after their meeting, Qin urged the Myanmar authorities “to crack down on internet fraud by taking concrete measures, coordinate efforts with various departments to continue advancing the China-Myanmar-Thailand joint combat operation, and rescue trapped Chinese nationals in a timely manner."
Tower warns, however, that the junta “simply has zero political will and zero capacity to deal with these issues.”
At the military junta's request, Thailand's Provincial Electricity Authority cut off power to Shwe Kokko early in June. “But that's not going to work,” Tower said, “because they have generators down there, and the activity is continuing. So, while China's trying to implement some sort of a crackdown, it's really working with the wrong partner in Myanmar, the military just simply is not going to be able to address these problems.”
On May 31, the Myanmar state-owned publication Global New Light said that "China and Myanmar were cooperating to combat transnational crimes."
Need for global action, political will
Tower told VOA that the issues of forced labor and cyber slavery by “scam syndicates” is not a problem only in Myanmar, but is becoming “deeply embedded across Southeast Asia, and is spanning out into other jurisdictions around the world. It needs “global leadership on this,” he continued.
ASEAN member countries such as current chair Indonesia and Malaysia have been part of recent efforts to stem these types of transnational crimes with the creation of a nonbinding forum known as the Bali Process, established in 2002 to fight against illegal immigration and human trafficking. However, “Myanmar is the place where the ability to respond is the weakest,” Tower told VOA.
“It’s really very much a mixed bag where some countries are calling for more to be done. Other countries have less political will,” Tower says. “In the case of Myanmar, there's really almost no political will to deal with this issue.”