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Fraud factory

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Fraud factory in Shwe Kokko, Myanmar.

Sometimes, more than one criminal organization use a building or building complex to perform fraud.This is called fraud factory, fraud park or scam compound. Usually the organizations do human trafficking. Very often, they are found in Southeast Asia. Many of them are operated by criminal gangs. Fraud factory operators lure foreign nationals to scam hubs. There, they are forced into modern slavery.The people are forced to scam internet users around the world. They have to make them buy cryptocurrencies or withdraw cash, via social media and online dating apps.[1] The typical scam is known as "pig butchering". Trafficking victims' passports are taken away, and they are threatened with organ harvesting and forced prostitution if they do not scam enough. These operations first appeared during the COVID-19 pandemic. They can be found in countries such as Cambodia, Myanmar, Laos. The civil war in Myanmar helped their operations.

Naming

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The term fraud factory first appeared in a 2022 Sydney Morning Herald article.[2] The article was about the Southeast Asian scams and human trafficking industry.

Kenya's Ministry of Foreign Affairs used the term for the activity of trafficking victims to Asia. The victims use digital media to meet westerners and sell them cryptocurrencies.[3] In Chinese, the term "fraud industrial park" is used.

Organization and ownership

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Fraud factories are often operated by Chinese criminal gangs based in Southeast Asia.[4] The gangs' traditional revenue stream of gambling reduced during the COVID-19 pandemic. As a result, they focus on fraud factories to regain lost revenue more and more.[4]

Human trafficking victims

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KK Park, a fraud factory in Myawaddy, Myanmar.

Between August and late September 2022, the Kenyan embassy in Thailand helped rescue 76 trafficking victims.[3] The victims were mostly Kenyan, and included Ugandans and a Burundian.[3] The criminal gangs who operate the fraud factories target young and educated Africans.[3] In November 2022, one Kenyan died after a botched organ harvesting operation associated with a fraud factory in Myanmar.[5][3]

Myanmar is also an emerging destination for international labour trafficking, especially along its border areas.[6] Victims in Myanmar include nationals from throughout Asia, including China,[1] Hong Kong,[1] India,[7] Indonesia,[1] Malaysia,[1] Nepal,[1] the Philippines,[8] Taiwan,[9] and Thailand.[10] People promise victims high-paying jobs. They are then trafficked through major cities such as Yangon and Bangkok, and transit points like Mae Sot and Chiang Rai.[6] They are forced to work in "special economic zones" along Myanmar's borders, such as Shwe Kokko.[6]

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.[11][12]

Operations

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

In 2022, BBC News reported that the locations of fraud factories were in Laos and Myanmar, notably in Kachin. In that area, there is the Kachin conflict. This makes rescues difficult.[3] In 2022, The Japan Times reported that factories which started operations in Cambodia later moved to Laos, and that victims were held in special economic zones in Laos and Myanmar Most of these were in Myawaddy. Some were casinos in Cambodia, particularly in Sihanoukville.[4][13] The trafficked victims are lured with job offers; BBC reported that one victim who had travelled to Thailand for a job was later driven to Laos.[3]

Fraud factory workers are trained to create online social media and dating personas. They then ise these personas to build up trust with westerners and engage in fake romance scams, to encorage the westerners to buy cryptocurrencies.[3][4] The targets of the bait and switch cyber crime were predominantly US citizens.[3] The process of fraudulently building up trust with victims online in order to sell them cryptocurrencies is known as "pig butchering".[4]

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 work hard enough.[3] Two victims who spoke to the BBC were rescued by Awareness Against Human Trafficking.[3]

Traffickers confiscate their victims’ passports. Some trafficking victims have returned to Kenya with broken limbs, from beatings by their captors.[3] 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.[14]

During the Myanmar civil war, the Three Brotherhood Alliance launched Operation 1027 against the Myanmar military regime on 27 October 2023, One ofth goals was to eradicate scam centers in the Kokang Self-Administered Zone along the northeastern border with China. China had grown frustrated with the Myanmar government's lack of response against fraud factories.[15][16] On 5 January 2024, the alliance fully captured the city of Laukkai in Kokang from the Myanmar military, and by late January claimed to have handed more than 3,000 scam suspects to China since the operation began.[17]

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.

Defensive criminal actions

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Scam compounds are able to continue operating even though their locations are known. They do this by bribing local law enforcement and politicians.[18] 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.[18]

Sihanoukville, Cambodia.

Cambodia, Laos, and Myanmar in Southeast Asia are known fraud factory destinations.[7] These countries are particularly vulnerable due to their strategic location next to China and weak law enforcement.[19] Below are known cyber scam hotspots:

  •  Cambodia:
  •  Laos:
    • Golden Triangle Special Economic Zone[20]
  •  Myanmar:
    • Laukkai (on the border with China)
    • Myawaddy[20] (on the border with Thailand) and nearby:
      • KK Park
      • Shwe Kokko[20]
    • Mong La[20] (on the border with Thailand)

International reactions

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United States Institute of Peace discussing industrial-scale scam compounds in 2024.

In November 2023, China issued arrest warrants for junta-aligned Ming Xuecheng, and three other Ming family members for their involvement in online scamming operations.[21] Ming later committed suicide. The other three were captured by Burmese authorities and handed to China.[22]

Works

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  • No More Bets, a 2023 Chinese crime thriller film about people trafficked into a fraud factory

References

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  1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 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. ↑ 3.00 3.01 3.02 3.03 3.04 3.05 3.06 3.07 3.08 3.09 3.10 3.11 "The Kenyans lured to become unwitting 'love' fraudsters". BBC News. 2022-11-26. Retrieved 2022-11-26.
  4. ↑ 4.0 4.1 4.2 4.3 4.4 Nagaraj, Anuradha; Wongsamuth, Nanchanok (2022-11-14). "Cyber criminals hold Asian tech workers captive in scam factories". The Japan Times. Retrieved 2022-11-26.
  5. ↑ 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
  6. ↑ 6.0 6.1 6.2 Hunt, Luke (2023-02-07). "Focus on Human Trafficking Shifts From Cambodia to Myanmar". The Diplomat. Retrieved 2023-03-16.
  7. ↑ 7.0 7.1 ANI (2022-11-24). "Over 200 Indian victims of job rackets rescued from Myanmar: MEA". ThePrint. Retrieved 2023-03-16.
  8. ↑ "8 Filipino trafficking victims in Myanmar rescued – DFA". cnn. Archived from the original on March 14, 2023. Retrieved 2023-03-16.
  9. ↑ "3 Taiwanese back from Myanmar human trafficking hotspot arrested - Focus Taiwan". Focus Taiwan - CNA English News. Retrieved 2023-03-16.
  10. ↑ "Rescued human trafficking victims in Thailand nears record high". Reuters. 2019-07-22. Retrieved 2023-03-16.
  11. ↑ "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.
  12. ↑ "'Hundreds of thousands' trafficked into SE Asia scam centres - UN". Reuters. 29 August 2023. Retrieved 30 June 2024.
  13. ↑ 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.
  14. ↑ Agence France-Presse (30 November 2023). "Trafficking victims in Myanmar forced to sell organs – charity". The Manila Times.
  15. ↑ 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.
  16. ↑ 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.
  17. ↑ The Irrawaddy (29 January 2024). "Myanmar Junta Hiding Cyber Scam Bosses: Brotherhood Alliance". The Irrawaddy. Irrawaddy Publishing Group. Retrieved 26 June 2024.
  18. ↑ 18.0 18.1 Daniel Ackerman; Meghna Chakrabarti; Tim Skoog (April 3, 2024). "'Pig-butchering': The online scam that's raked in $75 billion and counting".
  19. ↑ 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.
  20. ↑ 20.0 20.1 20.2 20.3 20.4 20.5 "Inside Southeast Asia's Casino Scam Archipelago". The Diplomat. 2022-08-02. Retrieved 2023-03-16.
  21. ↑ "Chinese Authorities Issue Arrest Warrants for Criminal Kingpins in Myanmar's Kokang Region". The Diplomat. 2023-11-13. Retrieved 2023-11-13.
  22. ↑ "China says ringleader in Myanmar telecom fraud committed suicide". Reuters. 17 November 2023.
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