US imposes sanctions on Cambodian tycoon over scam centers

The United States on Thursday announced sanctions against Cambodian businessman and ruling party senator Ly Yong Phat and several other entities over alleged abuses involving workers who were trafficked and forced to work in online scam centers.

The move comes at a delicate time in U.S.-Cambodia relations, which have been drawing ever closer to Washington’s strategic rival China despite U.S. efforts to court its new leader, Hun Manet, the son of longtime leader Hun Sen.

Ly Yong Phat was appointed personal adviser to Hun Sen in 2022.
According to the U.S. Treasury Department’s Office of Foreign Assets Control, the sanctions targeted the conglomerate Ly’s LYP Group Co. and O-Smach Resort.

The company also said it would impose sanctions on Cambodia-based hotels Garden City Hotel, Koh Kong Resort and Phnom Penh Hotel, because the hotels are owned or controlled by Ly.

Bradley Smith, acting undersecretary of the Treasury for terrorism and financial intelligence, said the action was taken to “hold accountable those involved in human trafficking and other abuses while disrupting their ability to commit investment fraud targeting countless unsuspecting individuals, including Americans.”

Cambodia and other Southeast Asian countries have in recent years become the epicenter of a multibillion-dollar criminal industry that lures victims around the world with fraudulent cryptocurrency and other schemes, often operating out of secure compounds run by Chinese syndicates that engage in human trafficking.

The Treasury Department statement said scammers use fictitious identities and elaborate stories to build trust and deceive victims.

In many cases, this involves convincing victims to invest in virtual currencies or, in some cases, over-the-counter currency exchange schemes, the report said.

The statement said traffickers force victims to work up to 15 hours a day and in some cases “sell” victims to other scammers or subject them to sex trafficking.

It was noted that the US State Department’s annual Trafficking in Persons Report this year exposed abuses in O’Smach and Koh Kong and that official complicity in human trafficking remained widespread, resulting in selective and often politically motivated enforcement of laws.

Americans have been the target of many of these scams. In 2022, victims in the U.S. alone reported losses of $2.6 billion from pig slaughtering — a type of long-term fraud — and other crypto scams, more than double the previous year, the FBI said.

According to the Treasury Department report, the O-Smach Resort has been under investigation and publicized by police for more than two years “for extensive and systematic serious human rights violations.”

According to the report, victims were lured to prison with false job offers, had their phones and passports confiscated upon arrival and were forced to participate in fraudulent schemes.

“People who called for help reported being beaten, assaulted with electric shocks, asked to pay large ransoms or threatened with being sold to other online scam gangs,” the report said. There were also two reports of victims jumping to their deaths from buildings at the resort.

The report said local authorities have carried out repeated rescue missions, including in October 2022 and March 2024, rescuing victims of various nationalities, including Chinese, Indians, Indonesians, Malaysians, Singaporeans, Thais and Vietnamese.

The U.S. State Department reported in June that Cambodian government officials were complicit in human trafficking and that some officials owned facilities used by scammers.

Spokespeople for the Cambodian government and the Foreign Ministry did not answer telephone calls or messages seeking comment on the sanctions.

The US and other governments have repeatedly worked with Cambodia to end the scam.

Washington had been considering sanctions for months, sources familiar with the matter told Reuters, saying the decision was initially expected earlier this year but had been delayed.

A change of leadership to the West Point-educated Hun Manet last year was seen by U.S. officials as an opportunity to mend ties with Cambodia, but despite U.S. efforts, ties with China have grown steadily. Beijing sent warships to Cambodia this year and is backing the expansion of a key naval base.