The truth must gradually blind – online fraud from Southeast Asia

Online fraud centers continue to operate from multiple countries in the South East and also appear to still have a supply of gullible customers from all over the world looking for romance, investment gains or gambling winnings. In the Philippines, there have been ongoing police raids on online fraud and illegal gambling centers banned by the president from July, indicating that many are still operating unaware of the law. In Myanmar, enforcement action in Kokang State has pushed Chinese organized crime groups into neighboring Karen State, a classic case of crime being displaced from policing. Large numbers of victims continue to be reported in Asia and other parts of the world, showing that despite widespread reporting of rampant online fraud in recent years, the truth is not yet clear to consumers.

Last week, Law enforcement authorities in the Philippines have raided a Philippine offshore gaming operator (“POGO”) operating an online fraud center in the Pasay area of ​​Metro Manila. The target company, 3D Analyzer Information Technologies, was located in a commercial building just 650 meters from the Senate Building of the Philippines. Police have arrested 190 Chinese, two Taiwanese and 62 Filipinos and found hundreds of phones and computers they say were used in online “romance scams.”

On August 31, Philippine 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 more POGOs operating in Cebu, authorities found more than 100 foreigners working with the POGO, most from China, but others from Indonesia, Taiwan, Malaysia and Myanmar. Five Filipino nationals were reportedly managers of the operation, while most foreigners were trafficked to work in the POGO and unlawfully detained. The Cebu raid stemmed from a request for assistance from the Indonesian Embassy in Manila, which received information that three of their nationals were being held in Cebu’s POGO.

President Marcos stated in his State of the Nation Address on July 22 that all POGOs would be banned due to the massive growth in illegal activities such as financial fraud, money laundering, prostitution, human trafficking, kidnapping, brutal torture and murder. However, it is clear that many of the licensed POGOs are still active, meaning that online fraud, gambling and sexual services are available from these centers in the Philippines to online customers.

There has been some impact on the Philippines. On September 28 the Philippine Bureau of Immigration stated that approximately 3,000 foreign workers involved in POGOs had already left the country after authorities “downgraded” 5,955 work visas to tourist visas. This reportedly accounts for about 55 percent of POGO workers on official visas, who have until October 15 to voluntarily have their visas reduced or be ordered to leave the country and be deported.

Despite the clear commitment to enforcement action by central authorities in the Philippines, it may prove difficult to completely uproot the POGOs as they may change the name of the move. Recently Senator Risa Hontiveros warned that POGOs could morph into other types of businessessuch as call centers, and operate from special economic zones, making them more difficult to detect.

Myanmar also remains a major hub for online fraud centers operated by organized crime groups. The American Institute for Peace reported in September that criminal activity in Karen State has increased dramatically in the past year after action led by the authorities of the People’s Republic of China (PRC) was successful in disrupting fraud operations in neighboring Kokang State. In Karen, state warlord Saw Chit Thu, the commander of the Karen Border Guard Force operating under the auspices of the Myanmar military, has facilitated Chinese criminals to establish fraud centers in the region. These Chinese organized crime groups continue to operate crime factories using forced labor and massive human trafficking. Because the PRC-led action against Chinese-operated criminal camps in Kokang State was successful, this simply resulted in the relocation of organized crime activities to alternative safe havens in Karen State.

The Chinese authorities’ crackdown, achieved through support for the Three Brotherhood Alliance’s offensive in northern Shan State, which forced them to close criminal camps in Kokang, may also have had an impact on the nature of the fraud committed by Chinese organized crime groups. criminal groups. Some are reportedly shifting the focus of their operations toward English-speaking victims and away from Chinese in an effort to avoid scrutiny from Chinese authorities. Given the PRC’s generally mixed response to international organized crime, only cracking down when there is an impact in China or on Chinese nationals, this shift by organized crime groups could be a smart one.

The People’s Republic of China continues to report on the results of measures against online fraud. In September, the Ministry of Public Security reported that Myanmar had handed over 20 key members of criminal gangs involved in telecom and online fraud to the authorities of the People’s Republic of China. The repatriated Chinese criminals were reportedly based in Kokang in northern Myanmarfrom there, targeting PRC nationals with telecom and online fraud. However, the leaders of the repatriated online fraud gang were arrested in Myanmar in November 2023 and therefore this is not a new case.

There are indications that Chinese authorities have curtailed or reduced their activities. In September, the Ministry of Public Security announced that a three-month enforcement campaign that began in June had led to the arrest of more than 11,000 suspects believed to be involved in crimes related to telecom and online fraud and the dismantling of 347 criminal centers. A senior Ministry of Public Security official said that “the rampant trend of telecom and online fraud in the region has been effectively curbed” following the targeted enforcement actions in northern Myanmar. This looks more like a clear case of relocation of organized crime activities following enforcement actions targeting a specific area.

Despite successful enforcement actions against online fraud groups in the Philippines and Myanmar, there remains a large pool of victims. In Japan, the National Police Agency (NPA) reported last week that incidents of investment fraud and social media scams have more than tripled in the first eight months of 2024. During the year to date, 6,868 reports of online fraud with losses of almost ¥88 billion ($592 million) were reported to the NPA, compared to 2,008 cases with losses of ¥21.1 billion (US$141 million) in the same period last year. The number of online investment fraud cases was four times higher than in 2023, with losses of ¥64.1 billion (US$431 million), while the volume of romance fraud doubled with total losses of ¥23.6 billion (US$158 million). Please note that these are only cases reported to the police, so the actual volume of online fraud and financial loss to victims is likely to be much higher.

In Japan, the majority of online fraud is committed using the messaging and social media app LINE, owned by the Japanese company LY Corporation. which reportedly has 178 million users across Asia, including 92 million in Japan. LINE is a multi-functional app with features for chat/messaging, music, fortune telling, part-time jobs, online shopping, buying securities or foreign exchange, and much more in a growing ecosystem of features. This constellation of activities on one platform makes it difficult for consumers to distinguish unfair from honest services. However, most victims reportedly transferred money to the fraudsters via bank transfers, suggesting that this may be the point where intervention can reduce the number of victims. This will require banks’ anti-fraud software to be much more effective, with AI tools predicting when to intervene in transactions.

There are victims of online fraud in many countries, but large numbers of Asians are also missing and suspected of being trafficked into criminal camps. Authorities in India recently announced that 29,466 Indians who traveled to Cambodia, Thailand, Myanmar and Vietnam on visitor visas between January 2022 and May 2024 have not returned. More than half of these are between twenty and thirty years old and more than two-thirds are men. Thailand accounts for 69 percent of missing Indian nationals, suggesting they may have traveled there for work but were then trafficked to a third country. Thailand appears to be a major transit point for people trafficked to fraud centers in Myanmar, and is therefore another potential target for intervention to identify Asian victims in transit.

Earlier reports in India indicate that more than 5,000 Indian nationals may be trapped in Cambodia and being forced into online fraud. Indian nationals would obviously be useful tools to carry out our online fraud against their fellow citizens due to language and cultural understanding, and the Indian Cyber ​​Crime Coordination Center (I4C) has reported that 45 percent of cybercrime targeting Indians is believed to originate from the South. East Asia. Since January 2023, approximately 100,000 cyber complaints have been filed on the National Cybercrime Reporting Portal.

It appears that online fraud in Asia is now better understood by governments and law enforcement agencies, but the impact on victims remains. Asian organized crime groups are agile and can migrate to new locations, such as the Philippines and Myanmar, and can also make good use of multiple safe havens where there is endemic corruption. Enforcement actions in several key locations against online fraud are progressing well, but a holistic multinational strategy organized on a credible neutral platform (such as a United Nations agency) remains necessary to better protect consumers who are slow to be blinded by the truth of online investment and romance fraud .