Finance:Fraud factory

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Short description: Human trafficking and online scam enterprises

A fraud factory or fraud park is a collection of large fraud organizations usually involved in human trafficking operations, commonly found in Southeast Asia (including Cambodia, Myanmar, or Laos) and usually operated by a criminal gang. Fraud factory operators lure foreign nationals to scam hubs, where they are forced into modern slavery, to scam internet users around the world into fraudulently buying cryptocurrencies or withdrawing cash, via social media and online dating apps.[1] Trafficking victims' passports are confiscated, and they are threatened with organ harvesting and forced prostitution if they do not scam sufficiently successfully.

Nomenclature

The term fraud factory first appeared in a Sydney Morning Herald article about the Southeast Asian scams and human trafficking industry[2] and was coined by Jan Santiago of Global Anti-Scam Organization (GASO), a victims advocacy group, in describing scamming operations in the region.[3][4]

The term was used by Kenya's Ministry of Foreign Affairs for the activity of trafficking victims to Asia where they use digital media to meet westerners and sell them cryptocurrencies.[5] In Chinese, the term "fraud industrial park" (Chinese: 詐騙園區; pinyin: zhàpiàn yuánqū; literally: 'fraud park zone') has emerged in reference to these operations.

Organization and ownership

Fraud factories are often operated by Chinese criminal gangs based in Southeast Asia.[6] The gang's traditional revenue stream of gambling reduced during the COVID-19 pandemic and their activities increasingly focus on fraud factories to regain lost revenue.[6]

Human trafficking victims

Between August and late September 2022, the Kenya embassy to Thailand facilitated the rescue of 76 trafficking victims.[5] The victims were mostly Kenyan, but also included Ugandans and a Burundian.[5] The criminal gangs who operate the fraud factories target young and educated Africans.[5] In November 2022, one Kenyan died after a botched organ harvesting operation associated with a fraud factory in Myanmar.[7][5]

Myanmar is also an emerging destination for international labour trafficking, especially along its border areas.[8] Victims in Myanmar include nationals from throughout Asia, including China,[1] Hong Kong,[1] India,[9] Indonesia,[1] Malaysia,[1] Nepal,[1] the Philippines,[10] Taiwan,[11] and Thailand.[12] Victims are lured by the false promise of high-paying jobs, and are trafficked through major cities like Yangon and Bangkok, and transit points like Mae Sot and Chiang Rai.[8] They are then forced to work in "special economic zones" along the country's borders such as Shwe Kokko.[8]

In late 2023, the United Nations estimated that at least 120,000 people in Myanmar are being held in online scam compounds, while at least 100,000 people are being held in similar circumstances in Cambodia.[13]

Operations

The Golden Triangle Special Economic Zone by the banks of the Mekong River

BBC News reported the locations of fraud factories as being in Laos and Myanmar, notably in Kachin where the Kachin conflict is occurring, a factor that makes rescues difficult.[5] The Japan Times reported that factories which initially started operations in Cambodia later switched locations to Laos and that victims were held in special economic zones in Laos and Myanmar (and also specifically Myawaddy), as well as casinos in Cambodia.[6] The trafficked victims are lured with job offers, with the BBC reporting one victim having traveled to Thailand for a job before being driven to Laos.[5]

Fraud factory workers are trained to create online social media and dating personas which they use to build up trust with westerners and engage in fake romance scams with the goal of encouraging the westerners to buy cryptocurrencies.[5][6] The targets of the bait and switch cyber crime were predominantly US citizens.[5] The process of fraudulently building up trust with victims online in order to sell them cryptocurrencies is known as "pig butchering".[6]

The trafficked Kenyans were prevented from leaving unless they paid 1.2m Kenyan shillings and were threatened with forced sex work and organ harvesting if they did not meet work performance targets.[5] Two victims who spoke to the BBC were rescued by Awareness Against Human Trafficking.[5] Traffickers confiscate their victims’ passports. Some trafficking victims have returned to Kenya with broken limbs, from beatings by their captors.[5] Vietnamese charity organization Blue Dragon reported trafficking victims forced to work in scamming operations in Myanmar are forced to sell their organs if they fail to meet quotas.[14]

Destinations

Cambodia, Laos, and Myanmar in Southeast Asia are known fraud factory destinations.[9] These countries are particularly vulnerable due to their strategic location next to China and weak law enforcement.[15] Below are known cyber scam hotspots:

  •  Cambodia:
  •  Laos:
    • Golden Triangle Special Economic Zone[16]
  •  Myanmar:

International reactions

In November 2023, China issued arrest warrants for junta-aligned Ming Xuecheng and three other Ming family members for their involvement in online scamming operations.[17]

See also

References

  1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 Hunt, Luke (2023-02-07). "As Myanmar Coup Intensifies Regional Human Trafficking, How Will China Respond?" (in en-US). https://thediplomat.com/2022/08/as-myanmar-coup-intensifies-regional-human-trafficking-how-will-china-respond/. 
  2. ↑ Southern, Lindsey Kennedy and Nathan Paul (2022-08-20). "The online scammer targeting you could be trapped in a South-East Asian fraud factory" (in en). https://www.smh.com.au/world/asia/the-online-scammer-targeting-you-could-be-trapped-in-a-south-east-asian-fraud-factory-20220818-p5baz3.html. 
  3. ↑ nikd. "The online scammer targeting you could be trapped in a South-East Asian fraud factory" (in en-AU). https://rockit.au/2022/09/09/the-online-scammer-targeting-you-could-be-trapped-in-a-south-east-asian-fraud-factory/. 
  4. ↑ Farivar, Cyrus. "How One Man Lost $1 Million To A Crypto 'Super Scam' Called Pig Butchering" (in en). https://www.forbes.com/sites/cyrusfarivar/2022/09/09/pig-butchering-crypto-super-scam/. 
  5. ↑ 5.00 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08 5.09 5.10 5.11 "The Kenyans lured to become unwitting 'love' fraudsters" (in en-GB). BBC News. 2022-11-26. https://www.bbc.com/news/world-africa-63654637. 
  6. ↑ 6.0 6.1 6.2 6.3 6.4 Nagaraj, Anuradha; Wongsamuth, Nanchanok (2022-11-14). "Cyber criminals hold Asian tech workers captive in scam factories" (in en-US). https://www.japantimes.co.jp/news/2022/11/14/asia-pacific/crime-legal-asia-pacific/southeast-asia-cybercrime-scams/. 
  7. ↑ Ministry of Foreign Affairs (Kenya) (16 Nov 2022). "16 November 2022 Tweet" (in en). https://twitter.com/foreignofficeke/status/1592788761095864321. "Already one young Kenyan has died as a result of a botched operation by quack doctors operating in the Chinese run factories in Myanmar" 
  8. ↑ 8.0 8.1 8.2 Hunt, Luke (2023-02-07). "Focus on Human Trafficking Shifts From Cambodia to Myanmar" (in en-US). https://thediplomat.com/2023/02/focus-on-human-trafficking-shifts-from-cambodia-to-myanmar/. 
  9. ↑ 9.0 9.1 ANI (2022-11-24). "Over 200 Indian victims of job rackets rescued from Myanmar: MEA" (in en-US). https://theprint.in/world/over-200-indian-victims-of-job-rackets-rescued-from-myanmar-mea/1234339/. 
  10. ↑ "8 Filipino trafficking victims in Myanmar rescued – DFA" (in en). https://www.cnnphilippines.com/news/2023/2/13/8-Filipino-trafficking-victims-in-Myanmar-rescued.html. 
  11. ↑ "3 Taiwanese back from Myanmar human trafficking hotspot arrested - Focus Taiwan" (in en-US). https://focustaiwan.tw/society/202208280011. 
  12. ↑ "Rescued human trafficking victims in Thailand nears record high" (in en). Reuters. 2019-07-22. https://www.reuters.com/article/us-thailand-trafficking-malaysia-idUSKCN1UH0EE. 
  13. ↑ "ONLINE SCAM OPERATIONS AND TRAFFICKING INTO FORCED CRIMINALITY IN SOUTHEAST ASIA: RECOMMENDATIONS FOR A HUMAN RIGHTS RESPONSE". 2023. https://bangkok.ohchr.org/wp-content/uploads/2023/08/ONLINE-SCAM-OPERATIONS-2582023.pdf. 
  14. ↑ Agence France-Presse (30 November 2023). "Trafficking victims in Myanmar forced to sell organs – charity". The Manila Times. https://www.manilatimes.net/2023/11/30/world/asia-oceania/trafficking-victims-in-myanmar-forced-to-sell-organs-charity/1922237. 
  15. ↑ Ratcliffe, Rebecca (2022-10-09). "Sold to gangs, forced to run online scams: inside Cambodia's cybercrime crisis" (in en-GB). The Guardian. ISSN 0261-3077. https://www.theguardian.com/world/2022/oct/10/sold-to-gangs-forced-to-run-online-scams-inside-cambodias-cybercrime-crisis. 
  16. ↑ 16.0 16.1 16.2 16.3 16.4 16.5 "Inside Southeast Asia's Casino Scam Archipelago" (in en-US). 2022-08-02. https://thediplomat.com/2022/08/inside-southeast-asias-casino-scam-archipelago/. 
  17. ↑ "Chinese Authorities Issue Arrest Warrants for Criminal Kingpins in Myanmar’s Kokang Region" (in en-US). 2023-11-13. https://thediplomat.com/2023/11/chinese-authorities-issue-arrest-warrants-for-criminal-kingpins-in-myanmars-kokang-region/. 



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