Cutting-edge tech helps cyber criminals steal a march over the law

Staff reporter

The rescue of a Chinese actor and two Hongkongers who were trafficked into scam farms has once again thrown the spotlight on just how tech-savvy cyber crime has become and how these masterminds continue to evade the law.

For even as law enforcers across Southeast Asia intensify their crackdowns against scam farms and fraud, organized crime continues to grow its underground network and ecosystem.

On January 7, actor Wang Xing was rescued after being duped into traveling to Thailand for a non-existent job and imprisoned in a scam farm in Myanmar's notorious Myawaddy. A Hong Kong victim also safely returned on January 16 after reportedly paying a ransom and another trafficked victim is expected to return to the city today.

While China and Hong Kong continue to liaise with Thailand to secure the release of trafficked citizens, conquering the multi-billion-dollar criminal industry remains a daunting challenge and needs a more co-ordinated global effort, the United Nations Office on Drugs and Crime says.

Organized criminal networks engaged in cyber-enabled fraud generate between US$27.4 billion (HK$213.7 billion) and US$36.5 billion in Southeast Asia a year, UNODC data shows.

That is more than the gross domestic product of Cambodia and double the size of Laos's.

Trafficking people for forced crimes such as online scams and fraud has been growing in Cambodia, Laos and Myanmar, and it is estimated that more than 100,000 victims have been held in Cambodia alone.

A single group of victims can generate hundreds of thousands of US dollars a week for traffickers, the UNODC says, adding that there are more than 40 nationalities of trafficking victims in scam compounds in Southeast Asia.

Huione Guarantee, a Telegram-based Chinese-language marketplace widely used by fraudsters in Southeast Asia, might be a "key enabler" of transnational organized crime groups carrying out scams targeting victims globally, according to blockchain analytics firm Elliptic Research.

The illicit online marketplace, with transactions totaling at least US$24 billion since its establishment in 2021, is associated with Huione, a Cambodian conglomerate reportedly connected to the country's ruling Hun family, it says.

Money laundering, stolen personal data, technology and other services essential for carrying out online fraud are being sold by thousands of vendors on the platform, Elliptic's report says.

Huione functions as a guarantor or escrow provider for all transactions on the platform, aiming to prevent fraud, the report says.

Although Huione claims that it "does not participate in nor understand the specific business of customers" and is unable to verify the "origin of funds or goods," platforms acting like middlemen play a crucial part in the ecosystem.

Employees of the middlemen are responsible for facilitating transactions by matching online scam operators with merchants who provide bank accounts in exchange for a commission, according to Chen Yanyu, an anthropology student at the National Tsinghua University, who began her field research on the scam industry in Cambodia in 2020.

These accounts are then used to receive money transfers directly from the scam victim and the funds are settled to the client in stablecoin Tether or USDT after deducting fees and exchange rate differences through the financial settlement process handled by middlemen, Chen wrote.

To evade detection by banks, account suppliers collaborate with anti-money laundering experts as they must carefully regulate the timing and amount of incoming remittances for each account to minimize the risk of accounts being frozen or closed, she wrote.

For example, outsourced suppliers in China might withdraw or transfer the funds to an unrelated bank account and then convert them into other currencies or USDT, and the entire process typically takes less than two hours, her paper states.

So what are countries doing to counter the scourge? China, for one, launched a nationwide clamp on SIM cards and bank accounts in a bid to crack down on money laundering back in 2020. Inactive or "suspicious" cards were frozen or deactivated and cardholders had to visit their banks in person to unlock them.

But the clampdown also impacted legitimate users, with many people complaining that they had lost access to their accounts or their cards had been reinstated with transaction limits of just 5,000 yuan (HK$5,312) a day.

Despite this, the crackdown appears to have worked. Nearly 1.5 billion bank cards deemed "abnormal," which included long-unused cards, multiple cards held by the same individual and those frequently reported lost and replaced, were cleaned up in 2021.

Authorities also busted nearly 5,000 card-related crimes involving more than 10 billion yuan in 2023.

As a result, Chinese money launderers have gradually switched from distributing money through online transfers and started to physically withdraw cash and then redeposit them into different accounts, according to Chen.

UNODC deputy regional representative for Southeast Asia and the Pacific, Benedikt Hofmann has called for a stronger regional and global response.

He says there's a growing gap between the speed at which new technology like generative artificial intelligence is being developed and used by criminals and the resources that governments have to tackle it.

He says getting ahead of the battle "will be incredibly difficult... it will take a very long time, time that we don't have with this technological change."