Malaysians are heavily involved in online scams and human trafficking

While many Malaysians are victims of human trafficking and online scams, a report on transnational crime in Southeast Asia shows the reality is more complex: Malaysians are also deeply involved in these illegal activities.

The report, “Transnational Crime in Southeast Asia: A Growing Threat to Global Peace and Security,” describes how criminal networks built fraud complexes in Myanmar, Cambodia and Laos and involved Malaysians in managing their operations and fraudulent proceeds.

“Two of the three illegal casino cities studied by a senior study group that wrote the report have direct ties to Malaysia,” said Jason Tower, country director of the Burma Asia Center at the United States Institute of Peoples (USIP), who co-chaired the study group.

“One of these casino towns, on the border between Thailand and Myanmar, was even established in Kuala Lumpur by a prominent figure in Chinese transnational criminal syndicates.

“The management team of another casino city was made up entirely of Malaysians. There are significant Malaysian connections in the operation of these casinos and related criminal enterprises.

“This means that Malaysians have been involved as operators of these illegal operations and as victims, particularly in human trafficking and online scams,” Tower added.above).

The areas where these casino towns are located are said to be a hub for cyber fraud involving victims of human trafficking.

This reflects the broader regional criminal landscape, where weak governance enables these activities.

The report identifies three key elements that undermine law enforcement’s ability to tackle the real perpetrators: corruption of officials from top to bottom and organized crime’s ties to government institutions such as the police, customs and other departments that help protect these operations.

Criminal networks enjoy political cover through Malaysia’s patronage system, making it difficult to identify the real ringleaders, while lower-level fraudsters become scapegoats, the report says.

The USIP 2024 report, published in May, is a comprehensive research analysis of geopolitical and criminal activity. It aims to provide policymakers with crucial insights to develop more effective solutions.

The boss of the Macanese triad

Tower points out that ironically, many of these scam centers were set up during China’s expansion through the Belt and Road Initiative (BRI), with implicit permission to operate in Southeast Asia.

However, during the Covid-19 pandemic, these operations increasingly targeted Chinese nationals, posing a major problem for the government.

Tower said that certain cities in China were once disproportionately affected by scams, but the problem escalated as Chinese citizens became both perpetrators and victims abroad, leading the government to treat them primarily as criminals rather than acknowledging their victimhood.

The report also shows how Chinese transnational criminal organizations are abusing China’s BRI to gain legitimacy and access in countries like Malaysia.

Criminal networks are working with Chinese officials to demonstrate their international support for the BRI, using the initiative as a cover for their activities.

Special economic zones, set up to attract foreign investment, are becoming havens for such illegal enterprises, especially in authoritarian countries.

The research found that Chinese triads in Malaysia use ethnic Chinese communities as entry points to build connections with political and economic elites, thereby embedding themselves in the region’s power structures.

The USIP report found that the Malaysian government has identified 72 criminal groups, a significant number of which are Chinese triads.

There are two major triads active in Malaysia that have ties to China, both dating back to the Qing Dynasty.

The “Green Gang”, connected to Wah Kee, and the “Red Gate”, connected to the infamous Hongmen or 14K Triad.

Hongmen is run by 69-year-old Wan Kuok-koi from Macau, also known as Broken Tooth Koi.

The businessman is a former leader of the Macau chapter of the 14K Triad and was released in 2012 after serving more than 14 years in prison for illegal gambling, loan sharking, criminal association and the attempted murder of police chief Antonio Marques Baptista with a car bomb.

He became chairman of Malaysian listed company Inix Technologies Bhd in August 2020 – a move the Securities Commission said was entirely legal as the law only excludes officers who have had a criminal conviction within the past five years of their appointment. He stepped down in December that year.

China’s Belt and Road Exploited

US officials have identified his other aliases, including Yin Guoju and Bung Nga Kuii.

His World Hongmen and Culture Association, based in Cambodia, has been active in Malaysia since at least 2018, the report said.

Usip said he and his allies have also set up legally registered businesses for their criminal activities and have adapted to stricter laws and enforcement in their home countries by expanding their operations abroad.

“In March 2020, a signing ceremony was held in Kuala Lumpur for several criminal investors in the Dongmei zone of Wan in Myanmar, and the management team for this project was subsequently recruited from Malaysia,” the report said.

The Dongmei Zone is an area where online scams take place. It was built between February 2020 and February 2022 in an area along the Thai-Myanmar border, where victims of human trafficking were brought.

During the groundbreaking event in 2020, the Dongmei Zone was named Saixigang.

“By portraying themselves as part of a renewed role for China in Southeast Asia, the criminal networks have benefited from China’s expanding investments in the region, particularly China’s Belt and Road Initiative (BRI),” the report said.

According to Tower, many illegal networks, such as the triads and Hongmen, have surprisingly become ardent supporters of the BRI and have started awarding contracts to Chinese state-owned companies.

For example, China Metallurgical Group Corporation (MCC), a major Chinese state-owned enterprise, was awarded a $350 million contract by Yatai International Holding Group (Yatai IHG) on the Thailand-Myanmar border.

Yatai IHG is involved in the development of these special economic zones. Cyber ​​fraud activities are also reportedly taking place here.

In a statement to Bangkok Post In May 2023, Yatai IHG rejected claims that it is conducting scams, saying the alleged scams are taking place outside the area the company is developing.

The USIP report also details how syndicates from China have transformed from subsidiaries to direct operators in Malaysia over the past two decades, setting up legal fronts including businesses and civil society organisations to conceal their illegal activities.

They are taking advantage of China’s growing role in Southeast Asia, particularly through BRI investments, to engage in fraud, money laundering and online gambling.

This transition underscores how online scams are driven by powerful criminal networks, while the real bosses remain safe from legal consequences due to systemic corruption.

In fact, Malaysia has played a significant role in facilitating and victimizing these transnational criminal activities, particularly those related to illegal gambling and online scams in Southeast Asia.

Tower acknowledges that he is personally focused on China’s involvement, although he notes the Malaysian connection to the wider criminal network. – Mkini