Free-flowing tourism, lax law enforcement and improved internet connectivity have opened the region to a myriad of Chinese criminal outfits
More than 200 Chinese nationals were arrested in Cambodia last month after local police raided a compound near the Thai border where an alleged cybercrime gang was operating an online blackmail and extortion ring.
The group is alleged to have blackmailed victims by building up relationships with people back in China through Internet voice calls before asking them to send naked photographs of themselves. When the scammers received the photos, they demanded between US$1,500-US$15,000 dollars to not publish them online.
In July, Cambodia also deported 74 Chinese nationals over similar Voice over Internet Protocol (VoIP) scams. The same month, 153 Chinese nationals were arrested in Indonesia, also accused of running an online fraud ring that targeted wealthy Chinese businessmen and politicians. They reportedly made US$450 million in a year.
In Thailand, 44 people from China and Taiwan were arrested last month for operating a similar scamming operation, which reportedly conned US$3 million from their mostly Chinese victims. Chinese telecom scammers have also recently been arrested in Fiji and as far from home as Kenya.
China’s online fraud syndicates have found Southeast Asia a profitable and permissive clime for their operations. The region’s improved internet connectivity – one of the world’s fastest growing – allows the gangs to operate in Thailand or Cambodia as easily as they could in Beijing or Hong Kong.
They appear to be attracted to Southeast Asia’s comparatively weaker policing than they would face at home, where the internet is highly monitored and surveilled. Many of the Chinese nationals arrested in Indonesia last month had reportedly entered the country without valid passports, a Jakarta police spokesman told local media.
Recent arrests made in Cambodia, Indonesia and Thailand all came after Chinese authorities tipped-off their local counterparts, rather than through successful domestic investigations. Cambodia has deported nearly 1,000 Chinese and Taiwanese to China since 2012, most accused of internet-related scams, according to the Associated Press.
As China cracks down on domestic cybercrime organizations, fraudsters are simply slipping across the border to Southeast Asia, often under the guise of tourism. China’s ruling Communist Party takes telecom fraud seriously: 19,345 people were arrested over related crimes last year alone, according to state-run Xinhua.
While Southeast Asian authorities normally deport online fraudsters to China – since their victims are predominately Chinese nationals – many of the gangs are composed of both Chinese and Taiwanese.
As the governments of China and Taiwan continue to clash over historic claims over which is the “real” China, the two countries’ criminal organizations have few qualms in cooperating.
Taipei has raised opposition in the past over its nationals being deported to China to stand trial. However, Michael Turton, a Taiwan-based journalist, wrote in a media report last year that Taipei often tacitly accepts Beijing’s purview over such matters.
Taiwanese citizens are also victims of the scammers and China’s harsher sentencing of criminals is widely viewed as a stronger deterrent than Taiwan’s laxer judiciary.
To be sure, China’s large and influential criminal syndicates have been active in Southeast Asia for decades. Many are known to have high-level political and economic connections in the region that provides important insulation from law enforcement or other potential disruptions.
China and Hong Kong’s triad gangs have long controlled drug trafficking operations in Southeast Asia, including opium production in the Golden Triangle encompassing parts of Laos, Myanmar and Thailand. However, they’ve faced strong competition from African and Iranian syndicates since the beginning of this decade, analysts say.
The South China Morning Post reported in 2014 that two of Hong Kong’s largest triad groups, the 14K and Sun Yee On, had begun exporting the raw ingredients needed to make ‘crystal meth’ to Mexican cartels, including the notorious Sinaloa cartel.
Chinese syndicates are now thought to be working closely with their Mexican counterparts to import cocaine and other high-end designer drugs which are growing in popularity with rising incomes in Southeast Asia.
The UN Office on Drugs and Crime (UNODC) estimates that the annual revenue from organized crime in Southeast Asia is about US$100 billion, according to a 2016 report. This includes the trafficking of drugs, people, contraband and weapons.
It was reported last year that the number of Vietnamese women being trafficked into China by Chinese traffickers is rising. Vietnam’s police say at least 70% of all local trafficking victims head north across the border.
Chinese gangs also control much of Southeast Asia’s illegal animal trafficking network, which exports endangered animals across the borders to China’s restaurants, as well as the trade in illegally harvested timber.
Global Witness, a London-based campaign group, has reported in the past how Chinese middle-class demand for luxury wooden furniture has swelled the Cambodian, Lao and Vietnamese illegal logging industries. Rosewood imports, much of it sourced in Southeast Asia, to China were worth US$2.6 billion in 2014, according to the Washington-based non-profit Forest Trends.
Jeremy Douglas, the UNODC’s representative for Southeast Asia and the Pacific, told Voice of America last year that trafficking has become much easier and quicker as Southeast Asia relaxes border controls, a result of greater integration efforts by the Association of Southeast Asian Nations (Asean) and tourism promotion in various countries.
This has benefited criminal organizations transporting illegal goods from Indonesia, for example, through other Southeast Asian nations to China.
The globalization of finance has also boosted Chinese gangs’ operations in Southeast Asia. Criminal organizations, including relatively modest ones like makeshift telecom scammers, need the financial apparatus to first hide their ill-gotten gains and then launder the funds.
Last year’s Anti-Money Laundering Index, compiled by the Basel Institute on Governance, a non-profit specializing in corruption prevention, ranked Cambodia as the worst country in East Asia and Pacific, and sixth-worst globally for vulnerability to money laundering. Myanmar and Laos were ranked second and third-worst in the region.
Cambodia’s Financial Intelligence Unit, an agency which monitors for financial crime, signed an intelligence-sharing agreement with its Chinese counterpart last year.
But analysts speculate that Beijing’s crackdown on corruption, invigorated since last year, has resulted in a rising amount of “dirty money” fleeing China for Cambodia. Once the money is “cleaned”, they say, it is often shipped back to China or invested elsewhere in Southeast Asia.
Recent crackdowns on Chinese cyber-gangs have been touted as a success for cross-border efforts by Chinese and Southeast Asian authorities. Yet some fear that as Beijing intensifies its anti-corruption campaign, more crime gangs will descend on Southeast Asia and target new local internet users unaccustomed to sophisticated online fraud.