Pax Sinica or Displacement? Chinese Action against Transnational Organized Crime in Southeast Asia
The Asian Crime Century briefing 39
(109 suspects involved in telecom fraud are handed over to Chinese police at a border pass in China's Yunnan province, Source: China Daily, September 2023)
On 26 September, the United Nations Office on Drugs and Crime (UNODC) published a ‘Regional Cooperation Roadmap to Address Transnational Organized Crime and Trafficking in Persons Associated with Casinos and Scam Operations in Southeast Asia’. The Agreement is clearly an important step to build effective regional cooperation in the fight against transnational organised crime gangs that have grown to huge proportions in the past few years operating illegal online businesses (fraud, sex services, casinos, sports betting) and in tandem trafficking people to work in these businesses. The human toll has been tens of thousands of people trafficked in Asia as well as millions of victims of fraud around the world.
The UNODC Roadmap would not be possible without the active cooperation of the government of the People’s Republic of China (PRC), which is a signatory of the agreement with the ASEAN states (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam). Many of the gangs originate from the PRC, much of the online crime is directed at victims in the PRC, and the insight into combatting the gangs (notably intelligence on the gang members and their networks) has to come from the PRC.
The UNODC brokered agreement includes five key areas of activity, which are:
1. Increase national and regional prevention efforts as a key strategy to addressing transnational organized crime and trafficking in persons associated with casinos and scam operations.
2. Increase the capacity of law enforcement agencies and criminal justice practitioners to respond to the crime associated with casinos and scam operations.
3. Increase identification of potential trafficking victims and strengthen mechanisms to protect, assist, and repatriate victims of forced criminality to their countries of origin.
4. Review and strengthen the implementation of relevant legislative and policy frameworks to address transnational organized crime, including trafficking in persons, cybercrimes, money laundering, and other crimes linked to casinos and scam operations.
5. Enhance cooperation with private sector, regional bodies, and civil society to strengthen transnational organized crime and trafficking in persons responses associated with casinos and scam operations.
These are powerful strategic law enforcement commitments, but to be effective on a regional basis across the ten member states of ASEAN there needs to be tangible cross border intelligence sharing (and analysis), investigations, raids with arrests, seizure of assets that are the proceeds of crime, and most importantly the prosecution and conviction of the most senior leaders of Asian organised crime groups.
Combatting organised crime across borders is especially difficult due to the national responsibility and focus of local law enforcement agencies, differing legal systems that can be hard to reconcile processes, and the resultant inertia that fails to be effective against transnational gangs who are agile and nimble business operators. Transnational organised crime gangs can move quickly from country to country when they are displaced by local enforcement action.
Chinese organised crime groups in particular have been displaced from their home country to other parts of Asia. This is a continual process that will change as national law enforcement agencies understand new threats and take local enforcement action, which in turn displaces the criminal groups elsewhere. In the gambling sector in the past two decades, Asian organised crime groups involved in gambling have evolved and been displaced through the following transitions.
From the early 2000s to 2017, Chinese organised crime groups from Mainland China and South East Asia (Singapore and Malaysia) expanded to the Philippines, where they operated online gambling with licenses in the Cagayan Economic Zone Authority, the Aurora Pacific Economic Zone & Freeport Authority, and the Authority of the Freeport Area of Bataan. The US Navy base at Subic Bay and the US Air Force Clark Air Base at nearby Angeles City both became Freeport Zones after the departure of US military in the early 1990s, but both retained a thriving prostitution industry controlled by criminal groups with international links to bring in customers as tourists. The criminal groups in the Freeport Zones also gravitated to operating casino gambling as well as later online gambling as a new revenue stream in the 1990s and 2000s.
From 2016 onwards, Chinese and South East Asian organised crime groups were further displaced from special economic zones in the Philippines to national licensing under the Philippine Amusement and Gaming Corporation (PAGCOR) as ‘Philippine Offshore Gaming Operators’ (POGO), following President Duterte’s instruction that licensing be centralized. Whilst this action by the national authorities improved the administration of gambling licensing, it did not yet displace transnational organised crime groups from the Philippines.
From 2018 onwards, Chinese and South East Asian organised crime groups were displaced (or expanded) from the Philippines to Cambodia (especially Sihanoukville) as well as Vietnam to operate casinos and online gambling, following pressure by the PRC government on the Philippines authorities to take action against Chinese criminal groups operating POGOs.
From 2022 onwards, Chinese and South East Asian organised crime groups have expanded from Cambodia to Myanmar to operate casinos, online gambling, and other criminal activities (people trafficking, online fraud, etc), following pressure by the PRC government on Cambodian authorities to take action against Chinese criminal groups operating in the country.
Organised Crime Pax Sinica in South East Asia
Since June this year the PRC authorities have reportedly been engaged in stepped up enforcement action against Chinese criminal gangs active in South East Asia. The Beijing Municipal Public Security Bureau has reported that since the launch of the crackdown in June, Beijing public security has investigated over 16,000 cases, including more than 4,500 cases of telecommunications and internet fraud, more than 60 criminal operations were broken up, and 132 suspects involved in naked chat extortion and telecom fraud were escorted back to China.
A tangible example of the PRC crackdown is the introduction of a new restricted zone in Yunnan Province on the border with Myanmar that is aimed at preventing trafficking of people as well as the easy cross border movement of criminals. People moving through Yunnan to Myanmar will need to obtain documents showing their purpose and register with local Chinese authorities; residents who need to enter the zone for farming or grazing should obtain a certificate from their residential communities; others who need to enter the zone for work must register with joint defence offices every month; and workers involved in construction and maintenance projects or the logging industry must obtain certificates from their supervisors and register every two weeks.
Arrest of Chinese gang members has to be led by local authorities, and in September the Indonesian police deported 153 Chinese nationals who were accused of running online romance scams targeting victims in China through social media and dating. The Chinese gang reportedly gained around USD 1.3 million in one year of operation in Indonesia, until their arrest in Batam Island and Singkawang on Borneo island. The deportation was assisted by PRC authorities, with 300 Chinese police officers accompanying the suspects on the flight home for them to face criminal charges.
The involvement of the PRC authorities is key to successful action against Chinese gangs. In August, the Ministry of Public Security reportedly worked with the Royal Thai Police, the Myanmar Police Force, and the Lao Ministry of Public Security on an operation against gambling fraud and related crimes such as human trafficking, kidnapping, and illegal detention in Chiang Mai, Thailand. The agencies established a coordination centre in Chiang Mai in Thailand.
(164 suspects involved in telecommunications fraud brought back to China from Laos, Source: Global Times, 11 September 2023)
Enforcement action is more difficult in Myanmar due to the civil war in the country, but in August the United Wa State Army in eastern Shan state reportedly arrested more than 1,200 Chinese nationals allegedly involved in online fraud and handed the suspects to Chinese police at the border gate in Panghsang, the capital of Wa-administered territory on the border with Yunnan Province.
The successful enforcement action in South East Asian countries against Chinese gangs is clearly benefitting from intelligence as well as operational assistance from PRC police and other agencies. This trend is likely to continue and we will see Chinese law enforcement agencies becoming increasingly comfortable working across borders and pressing their Asian counterparts to take action against transnational organised crime groups.
Follow the Money
Effective action against transnational organised crime groups will require identification of the assets that are the proceeds of crime and the seizure of these through appropriate legal mechanisms. The scale of the money laundering relating to transnational organised crime in Asia was recently identified by the action taken by the Singapore Police Force when officers arrested ten Chinese nationals (many also with other citizenship) and seized assets amounting to SGD 2.4 billion (USD 1.7 billion). The Singapore Police have commented that the money and other assets are believed to be the proceeds of frauds and online gambling (and sports betting, which is a profitable business line of the criminal groups involved).
The Singapore case highlights the problem with the transnational organised crime networks in Asia, which is how to find and arrest the leaders who receive the vast profits of the dispersed criminal businesses. Those arrested in Singapore do not look like the ultimate leaders of the criminal enterprise, but rather they are the ‘middle men’ involved in receiving the proceeds of crime, transferring these into other assets, and disposing of them so that profits can be transferred to the leaders responsible for the criminal business.
The cooperation from the PRC leading to the arrest by local authorities of thousands of Chinese nationals in Cambodia, Laos, Myanmar, Thailand and other countries in the region will not stop the transnational organised crime gangs that have spread the epidemic of online fraud, gambling, betting, and sex. There will be a temporary impact as the operations of the criminal gangs involved are interrupted, but they are then displaced to other countries or operate in alternative locations where the local authorities turn a blind eye in return for bribes.
The ASEAN and PRC agreement brokered by the UNODC is a good start for the strategic approach to combatting growing Chinese organised crime. The next step is to follow the money, and in turn chase the ultimate criminal leaders.