The truth must dazzle gradually – Online fraud from SE Asia
The Asian Crime Century briefing 93
Online fraud centres continue to operate from multiple countries in South East and seemingly also continue to have a supply of gullible customers from around the world seeking romance, investment profits, or gambling winnings. In the Philippines there are continued raids by the police against online fraud and illegal gambling centres that were banned by the President from July, indicating that many continue to operate obliviously to the law. In Myanmar Chinese organised crime groups have been displaced by enforcement action in Kokang state to neighbouring Karen state, a classic case of displacement of crime from policing action. Around Asia and other parts of the world there continue to be high numbers of victims reported, showing that despite the widespread reporting of rampant online fraud in the past few years the truth is not yet clear to consumers.
Last week, law enforcement agencies in the Philippines raided a Philippine offshore gaming operator (‘POGO’) operating an online fraud centre located in the Pasay area of Metro Manila. The target company, 3D Analyzer Information Technologies, was located in a commercial building located only 650 metres from the Philippines Senate building. The police detained 190 Chinese, two Taiwanese and 62 Filipinos and found hundreds of phones, computers which they believe were used in online ‘romance scams’.
On 31 August, the Philippines authorities raided a resort in Lapu-Lapu City on Cebu island and found a POGO operating illegally. Despite earlier police statements that there were no longer any POGOs operating in Cebu the authorities found over 100 foreign nationals working at the POGO, most from China but others from Indonesia, Taiwan, Malaysia, and Myanmar. Five Philippines nationals were reportedly managers of the operation, whilst most of the foreign nationals were trafficked to work in the POGO and unlawfully detained. The raid in Cebu originated from a request for assistance from the Indonesian Embassy in Manila which received information that three of their nationals were held at the Cebu POGO.
President Marcos declared in his state of the nation address on 22 July that all POGOs would be banned due to the huge growth of illicit activities such as financial scamming, money laundering, prostitution, human trafficking, kidnapping, brutal torture and murder. However, clearly many of the licensed POGOs continue to operate which means that online frauds as well as gambling and sexual services from these centres in the Philippines are available to online customers.
There has been some impact in the Philippines. On 28 September the Philippines Bureau of Immigration stated that around 3,000 foreign workers involved in POGOs had already left the country after the authorities “downgraded” 5,955 work visas to tourist visas. This reportedly accounts for around 55 per cent of POGO workers with official visas, who have until 15 October to voluntarily downgrade their visas or be ordered to leave the country and be deported.
Despite the clear dedication to enforcement action by the central authorities in the Philippines, it may prove difficult to completely uproot the POGOs as they can rebrand move location. Recently Senator Risa Hontiveros warned that POGOs may rebrand into other types of businesses, such as call centres, and operate from special economic zones which would make them more difficult to detect.
Myanmar also remains a key hub for online fraud centres operated by organised crime groups. The US Institute for Peace reported in September that criminal activity in Karen state has surged in the past year after action led by the authorities from the People’s Republic of China (PRC) was successful in disrupting fraud operations in neighbouring Kokang state. In Karen state warlord Saw Chit Thu, the commander of the Karen Border Guard Force that operated under the auspices of the Myanmar army, has facilitated Chinese criminals to base fraud centres in the region. These Chinese organised crime groups continue to operate crime factories using forced labour and mass human trafficking. As PRC led action against Chinese operated criminal compounds in Kokang state was successful, this simply had the effect of displacing organised crime activity to alternative safe havens in Karen state.
The crackdown by the PRC authorities, achieved through support for the offensive by the ‘Three Brotherhood Alliance’ in northern Shan state that led to them closing down criminal compounds in Kokang, may also have had an impact on the nature of fraud conducted by Chinese organised crime groups. Some are reportedly shifting their focus of operations to English speaking victims and away from Chinese in an effort to avoid scrutiny from the PRC authorities. Given the usually variable PRC response to international organised crime, which involves cracking down only when there is an impact in China or on Chinese nationals, this shift by organised crime groups may be a smart one.
The PRC continues to report the outcome of action against online fraud. In September, the Ministry of Public Security reported that 20 key members of telecom and online fraud criminal gangs were handed over to PRC authorities by Myanmar. The repatriated Chinese criminals had reportedly been based in Kokang in northern Myanmar, from there targeting PRC nationals with telecom and online fraud. However, the leaders of the online fraud criminal gang repatriated were arrested in Myanmar in November 2023 and hence this is not a new case.
There are indications that the PRC authorities have curtailed their operations, or lessened them. In September, the Ministry of Public Security announced that a three month enforcement campaign that commenced in June had led to the arrest of over 11,000 suspects allegedly involved in telecom and online fraud-related crimes and the dismantling of 347 criminal centres. A senior official of the Ministry of Public Security stated that “The rampant trend of telecom and online fraud in the region has been effectively curbed” after the targeted enforcement action in northern Myanmar. This looks more like a clear case of displacement of organised crime activity after enforcement action targeted at a specific area.
Despite successful enforcement action against online fraud groups in the Philippines and Myanmar, there remains a strong supply of victims. In Japan, the National Police Agency (NPA) reported last week that incidents of investment fraud and romance scams via social media have more than tripled in the first eight months of 2024. During the year to date, 6,868 reports of online fraud involving losses amounting to almost ¥88 billion ($592 million) were reported to the NPA, up from 2,008 cases with losses of ¥21.1 billion (US$141 million) in the same period last year. Online investment fraud cases were four times greater than in 2023, with losses of ¥64.1 billion (US$431 million), whilst romance frauds doubled in volume with total losses of ¥23.6 billion (US$158 million). Bear in mind that these are only cases reported to the police, and so the actual volume of online fraud and financial loss to victims is likely to be far higher.
In Japan most of the online frauds are conducted using the LINE messaging and social media app, owned by Japanese company LY Corporation, which reportedly has 178 million users across Asia, with 92 million of these in Japan. LINE is a multi-function app with functions for chat / messaging, music, fortune telling, part-time jobs, online shopping, buying securities or foreign exchange, and many more in a growing eco-system of functions. This constellation of activities on a single platform makes it difficult for consumers to differentiate dishonest from honest services. However, most of the victims reportedly moved money to the fraudsters using bank transfers which indicates that this point may be where intervention can lessen the number of victims. This will require by bank anti-fraud software to be far more effective, with AI tools predicting when intervention in transactions should be conducted.
There are victims of online fraud in many countries, but there are also large numbers of Asians missing and believed to have been trafficked into effective slavery in criminal compounds. The authorities in India recently announced that 29,466 Indians who have travelled to Cambodia, Thailand, Myanmar, and Vietnam from January 2022 and May 2024 on visitor visas have not returned. More than half of these are aged in their 20s and 30s and over two thirds are male. Thailand accounts for 69 per cent of the missing Indian nationals, indicating that they may have travelled there for work but then been trafficked to a third country. Thailand seems to be a key transit country for people trafficked to fraud compounds in Myanmar, and hence is another potential target for intervention to identify Asian victims in transit.
Earlier reports in India are that over 5,000 Indian nationals may be trapped in Cambodia and forced to conduct online fraud. Indian nationals would of course be useful tools to carry our online fraud against their fellow citizens because of language and cultural understanding, and the Indian Cyber Crime Coordination Centre (I4C) has reported that 45 per cent of cybercrimes targeting Indians are believed to come from South East Asia. Since January 2023, around 100,000 cyber complaints have been filed on the National Cyber Crime Reporting Portal.
It seems that online fraud in Asia is now better understood by governments and law enforcement agencies, but the impact on victims continues. Asian organised crime groups are nimble and can migrate to new locations, as seen in the Philippines and Myanmar, and also make good use of multiple safe havens where there is endemic corruption. Enforcement action in several key locations against online fraud is progressing well, but a holistic multinational strategy organised on a credible neutral platform (such as a United Nations agency) continues to be required to better protect consumers who are only slowly be dazzled by the truth of online investment and romance frauds.