Inside the Scam State: How Southeast Asia Became Ground Zero for Forced Labor Fraud Factories

A demolition that revealed a deeper crisis

Days before the explosions, a sprawling business park on Myanmar’s border emptied out. When demolition began, bombs and dynamite toppled office blocks, a small hospital, karaoke halls, gyms and dorms. The military government hailed it as the end of KK Park, a vast compound that had hosted tens of thousands of workers forced to defraud strangers online. Cameras showed collapsing buildings. The operators had already moved on.

Officials said more than 2,000 people had been detained and over 1,000 had fled across the border. Aid groups and analysts warned that as many as 20,000 people who had likely been trafficked were missing. Away from staged footage, similar scam centers continued to run in other districts and countries. The raids trimmed branches, not the trunk.

Researchers describe a new phase, the rise of the scam state. The term mirrors narco state, where organized crime reshapes the economy, seeps into institutions, and turns public power toward protecting profit. In parts of Southeast Asia, fraud has grown into an industry that pays salaries, finances armed groups, rewards officials and funds construction.

Jacob Sims, a visiting fellow at Harvard University’s Asia Center who studies transnational crime in the Mekong, said the public crackdowns often aim at optics, not the core networks.

It is a way of playing Whack-a-Mole, where you do not want to hit a mole.

Sims said online fraud has shifted in five years from small rings to an industrial political economy. He argues it now drives much of the Mekong sub region.

In terms of gross GDP, it is the dominant economic engine for the entire Mekong sub region. That also makes it a dominant political engine.

From romance ruse to industrial fraud

At the heart of many operations is pig butchering. A scammer spends weeks building trust with a target on social platforms or chat apps. The contact may pose as a finance professional or a potential partner. Once the victim feels secure, they are guided to move savings into a fake investment, often a cryptocurrency platform that looks real.

The scripts are detailed. Teams use generative AI to translate, shape tone, and carry on dozens of conversations at once. Deepfake video and voice tools make video calls feel legitimate. Mirrored websites copy the look and function of real brokerages and exchanges. When a victim tries to withdraw profits, access is blocked or fees mount until the account is drained.

Losses can be devastating. Surveys in multiple countries found average losses above 150,000 dollars per victim in pig butchering schemes. Many reported losing more than half of their net worth. Estimates for the global take range from 70 billion dollars to sums that rival the illicit drug trade.

How the scam state took root

The fraud factories did not appear overnight. They grew from older criminal businesses, especially Chinese offshore gambling that moved to border regions after tighter rules. Special economic zones and casino towns in lawless areas offered land, buildings and protection. Conflict in Myanmar after the 2021 coup accelerated the shift, as local militias and power brokers traded safety for cash.

The hubs prosper in weakly regulated corridors. In Laos, officials have acknowledged hundreds of compounds inside the Golden Triangle special economic zone. In Cambodia, independent monitors have mapped more than two hundred suspected sites, many in plain view and shielded by private guards. Their size and visibility point to protection that reaches far beyond one town.

Jason Tower, a regional specialist on organized crime networks, has tracked the build out.

These are massive pieces of infrastructure set up very publicly. You can go to borders and observe them. The fact this happens in a very public way shows an extreme level of impunity.

By late 2024, operations in Mekong countries were estimated to be generating around 44 billion dollars a year, roughly 40 percent of the combined formal economies. Experts say the industry exploded after 2021 and now exceeds 70 billion dollars a year worldwide.

Trafficking and forced labor at the core

The scam business creates two sets of victims. People around the world lose savings to online fraud. Inside the compounds, trafficked workers are abused and forced to carry out the deception.

Recruiters place fake job ads that promise sales or tech work. New arrivals have passports taken and are locked in. Managers demand daily quotas and punish poor performance with beatings, shocks, food deprivation, sexual violence or solitary confinement. Families are told to pay ransoms for release. People who try to escape risk torture or being sold to other gangs.

Independent human rights experts working with the United Nations have called the situation a humanitarian and human rights crisis. Hundreds of thousands of people from Asia, Africa and Latin America have been trafficked into centers in Cambodia, Myanmar, Laos, the Philippines and Malaysia. Thousands of rescued people have been stranded for weeks at the Myanmar Thailand border in poor conditions.

Benedikt Hofmann, a regional representative with the UN Office on Drugs and Crime (UNODC), described the geography and the scale.

Southeast Asia is the ground zero for the global scamming industry.

Cyril Gout, the acting executive director of police services at INTERPOL, said national agencies and partners must act in concert to counter what has become an international crime trend.

The reach of online scam centres spans the globe and represents a dynamic and persistent global challenge. Tackling this rapidly globalizing threat requires a coordinated international response.

INTERPOL has documented victims trafficked from more than sixty countries, with nearly three quarters directed to Southeast Asia. Recent operations identified compounds not only in the Mekong region but also in the Middle East, West Africa and Central America.

Technology keeps the machines running

The centers use tools that scale deception and hide money trails. That combination makes the industry agile and hard to disrupt.

AI and synthetic media

Scam teams use AI to translate messages in real time, adjust personality and write convincing scripts. Deepfake technology builds photos, voice notes and live video that help recruiters trap workers and fraudsters trap victims. Sextortion operations have adopted AI generated profiles to target young people in particular.

Satellites and connectivity

Authorities have tried to cut power and fiber to border compounds. Operators shifted to satellite internet. Investigators have documented the use of satellite terminals that sustain connectivity after raids or utility cuts. Lawmakers in the United States have pressed providers to block service to compounds that are known for trafficking and online fraud.

Crypto and laundering

Fraud proceeds move through exchanges, stablecoins, digital banks and money mule networks. Analysis by blockchain specialists has exposed large service networks that move billions of dollars for these syndicates. Holding companies and brokers inside special economic zones sell financial services to crime groups, allowing rapid conversion and cash out with minimal checks.

Money and power: when crime meets politics

The profits are so large that criminal organizers seek status, protection and leverage. Individuals linked to major networks have held advisory roles and cultivated ties with powerful families. In October, the United States announced sweeping sanctions and indictments against a Cambodian conglomerate alleged to run vast scam operations. Prosecutors in a related case moved to seize nearly 15 billion dollars in cryptocurrency, one of the largest forfeiture actions on record.

Regional politics has been touched as well. A Thai deputy finance minister stepped down after questions about contacts with operators in Cambodia, a claim he has denied. In the Philippines, a former mayor who oversaw a large compound was sentenced to life imprisonment. In Myanmar, parts of the scam business help finance armed groups that control territory.

Analysts warn that when criminal income becomes a pillar of local economies, it blurs the line between public authority and private rackets. That is why large compounds operate openly and with little fear of disruption.

Why raids rarely work

Criminal organizers plan for enforcement and adapt quickly. Whenever a compound is raided, staff and managers scatter to nearby sites or across borders. After a high profile border crackdown that cut utilities and freed thousands, building crews soon returned and new structures appeared. Satellite dishes sprouted to keep business going.

The geography is shifting. UN crime experts have warned that parts of East Timor are now at risk after a raid in the Oecusse enclave uncovered gear and patterns identical to scam compounds elsewhere. INTERPOL has flagged new sites in West Africa, and authorities in the Middle East and Central America have reported similar facilities.

Regional diplomacy helps, but the Association of Southeast Asian Nations is a cooperation forum, not a supranational police force. Governments vary in capacity and commitment. Some countries, such as Singapore, have passed laws that make it easier to freeze suspect transfers, pursue mules and block malicious calls. Others struggle with corruption, civil conflict or limited resources.

Thailand has tried to starve compounds near its border by cutting power, fuel and internet access. Operators responded with satellite links and new routes for supplies. That back and forth shows why narrow enforcement wins do not end the industry.

What an effective response looks like

A sustained response needs to move on four tracks at the same time, all centered on people who are victimized.

Protect and rescue. Countries of origin should expand safe labor migration channels and staff hotlines for job scams. Border units need the mandate to identify trafficking victims inside scam compounds, not just arrest them for fraud. Survivors require medical care, travel documents, debt relief and secure return programs.

Choke the money. Law enforcement and regulators should pressure exchanges, payment processors and market makers to freeze wallets linked to known networks, enforce strict due diligence and monitor off ramps connected to special economic zones. Banks should be able to reverse suspect transfers quickly and stop romance investment scams before funds settle.

Hold enablers accountable. Satellite internet providers, data centers, domain hosts, messaging platforms and telecom carriers should cut service to known compounds and block lookalike investment domains. Share verified site lists with carriers and platforms, and require transparency from special economic zones about ownership and tenants.

Build real cross border cases. Police units need shared intelligence platforms, joint teams and fast channels with INTERPOL to track recruiters, facilitators and financial controllers across borders. Sanctions and asset seizures should reach not just front companies but also professional service providers, property owners and fixers that enable the compounds.

If these tracks progress together, the business model changes. The work force shrinks, the cost of moving money rises, and the compounding effect of elite protection begins to fade.

How to spot and avoid pig butchering

Criminal scripts are polished, but they still leave signals. Treat the red flags below as reasons to pause and verify.

• Unsolicited chats from strangers on WhatsApp, Telegram or dating apps that steer toward investments.
• Sudden friendships that get personal fast and lead to moving conversations off platforms.
• A contact who avoids video calls at key moments or uses video that seems out of sync with audio.
• Claims of inside access to crypto opportunities or limited time arbitrage.
• A website or app that looks professional but has no clear company registration or license.
• Difficulty withdrawing funds unless you pay new fees or taxes.
• Pressure to keep the investment secret from family or bank staff.
• Requests to send money to third party accounts, gift cards or crypto wallets.
• A job offer abroad that requires paying fees up front or surrendering a passport.
• Any demand to install remote access tools on your phone or computer.

If you suspect a scam, stop transferring money. Take screenshots, keep all records and report to your bank and local police. Ask a trusted friend to review the exchange. No legitimate investment should require secrecy or pressure.

What to Know

• KK Park in Myanmar was demolished, but operators had already moved and thousands of trafficked workers are unaccounted for.
• Pig butchering, a trust building ruse that ends in fake investments, is the signature tactic of these networks.
• Operations in the Mekong region are estimated to generate about 44 billion dollars a year, while worldwide estimates exceed 70 billion dollars.
• UN experts call the situation a human rights crisis, with hundreds of thousands trafficked into compounds across Cambodia, Myanmar, Laos, the Philippines and Malaysia.
• INTERPOL reports victims trafficked from more than sixty countries, with nearly three quarters sent to Southeast Asia.
• Syndicates use AI, deepfakes, mirrored websites, satellite internet and cryptocurrency to scale fraud and evade disruption.
• Political ties and special economic zones help large compounds operate openly with protection.
• Raids often lead to relocation, with new hotspots emerging in places such as East Timor and West Africa.
• An effective response requires victim centered rescues, financial choke points, cross border policing and action by technology and telecom companies.