Sri Lanka Becomes a New Base for Scam Networks as Southeast Asia Tightens Enforcement

A Hotel Raid Reveals a Wider Shift

Sri Lankan police detained 152 foreign nationals, mostly Chinese, at a seaside hotel in Chilaw earlier in April 2026, uncovering an elaborate online fraud operation. Police spokesman Frederick Wootler said officers seized 143 laptops, 120 desktop computers and 370 mobile phones. Two Chinese nationals were injured while trying to flee and required hospitalization.

The equipment found in the hotel points to the scale of an operation that could run from ordinary tourist accommodation. The raid also fits a broader change: scam networks established across mainland Southeast Asia since the COVID-19 pandemic are expanding into other countries as enforcement intensifies in Cambodia and Myanmar.

Sri Lanka is emerging as a primary destination for these displaced operations. Instead of maintaining large, conspicuous compounds, criminal groups are using hotels, guesthouses and apartments that allow them to establish smaller operations and move more easily when police approach.

During the first three months of 2026, arrests connected to scam centres in Sri Lanka already exceeded half the total recorded during all of 2025. If that pace continues, annual arrests could exceed 600, roughly twice the figures recorded in either 2024 or 2025. That is a projection based on the early pace of arrests, while the figures themselves leave out cases handled quietly by immigration authorities and operations that remain undetected.

The developments bring together two forms of harm: people overseas lose money to fraud, while some people working inside scam operations have been trafficked and forced to commit crimes. Police responses therefore need to identify who organized the fraud and who may have been compelled to take part.

Pressure Mounts in Cambodia and Myanmar

Cambodian authorities launched a major enforcement campaign in February 2026, raiding 2,709 locations suspected of hosting online fraud operations and identifying more than 21,000 foreign nationals as potential suspects. The targets included notorious scam compounds that had operated for years with varying degrees of official acquiescence.

The United States Institute of Peace estimated that these operations generated $12.5 billion annually, equivalent to roughly half of Cambodia's formal gross domestic product. Gross domestic product measures the value of goods and services produced in an economy; the comparison conveys how large the scam industry had become alongside Cambodia's formal economy.

Enforcement against Prince Group also escalated. Chen Zhi, its founder and chairman and a former personal advisor to Cambodian Senate President Hun Sen, was arrested in Cambodia on January 6, 2026. He was swiftly extradited to China for investigation into large scale online fraud and related crimes.

Financial action preceded his arrest. In October 2025, the United States government seized more than $14 billion in cryptocurrency assets from the group. Nearly $700 million more was frozen in Hong Kong, Singapore, South Korea, Thailand and Taiwan the following month.

Cambodia's campaign, together with intensifying enforcement in Myanmar, has pushed networks to fragment and relocate. Owners have repeatedly adapted to pressure by dividing operations into smaller groups and crossing borders. The Asia Foundation has tracked increasingly frequent references to Sri Lanka on social media used by journalists and commentators following the Cambodian situation, including references to groups and individuals leaving Southeast Asia.

How the Events Unfolded

The expansion into Sri Lanka follows several years of international investigations, survivor assistance and financial enforcement. The sequence shows that the recent raids are part of a longer response to trafficking and online fraud.

• January to September 2023: The International Organization for Migration assisted 41 survivors trafficked for forced labor in Southeast Asian Special Economic Zones.
• October 2023: INTERPOL conducted Operation Storm Makers II after five months of investigative coordination.
• 2024: Cooperation between China and Sri Lanka resulted in the arrest and repatriation of several Chinese nationals.
• October 2025: The United States government seized more than $14 billion in cryptocurrency assets from Prince Group.
• November 2025: Nearly $700 million was frozen in Hong Kong, Singapore, South Korea, Thailand and Taiwan.
• January 6, 2026: Chen Zhi was arrested in Cambodia and swiftly extradited to China.
• February 2026: Cambodia raided 2,709 suspected locations, while the UN Human Rights Office released a report on abuse in scam operations.
• Early April 2026: Sri Lankan police detained 152 foreign nationals at the Chilaw hotel. A subsequent operation in Anuradhapura detained 134 foreign nationals.

By April 16, the pattern was one of mounting enforcement alongside movement into new locations. The networks' ability to move personnel and equipment has allowed operations to continue beyond their earlier bases.

The People Forced to Run the Scams

A February 2026 report from the UN Human Rights Office documents the experiences of hundreds of thousands of people trafficked from dozens of countries into entrenched scam operations. It describes torture, sexual abuse and exploitation, forced abortions, food deprivation and solitary confinement.

The report draws on interviews with survivors from Bangladesh, China, India, Myanmar, Sri Lanka, South Africa, Thailand, Vietnam and Zimbabwe. Their accounts show that the workforce behind online fraud includes people recruited through deception and then held under threat.

Survivors described heavily fortified buildings with multiple storeys, high walls topped with barbed wire and armed guards. Some compounds resembled towns and covered more than 500 acres. People who failed to meet monthly scamming targets could be placed for hours in containers filled with water, described as water prisons.

UN Human Rights Chief Volker Türk described both the abuse and the treatment survivors often receive after leaving these operations:

The litany of abuse is staggering and at the same time heart-breaking. Yet, rather than receiving protection, care and rehabilitation as well as the pathways to justice and redress to which they are entitled, victims too often face disbelief, stigmatization and even further punishment.

The International Organization for Migration's assistance to 41 survivors between January and September 2023 also illustrates the migration dimension of the crisis. Those survivors had been trafficked for forced labor in Southeast Asian Special Economic Zones.

Recruiters typically advertise apparently legitimate jobs in customer service, hospitality or technology. People who accept can instead find themselves imprisoned and forced to carry out impersonation scams, fraudulent investment pitches or romantic schemes known as pig butchering.

The UN report describes operations ranging from vast compounds to smaller, mobile units of the kind now appearing in Sri Lankan hotels and guesthouses. That range makes the treatment of people found during raids a central part of enforcement: identifying trafficking victims requires attention to coercion as well as the fraud being committed.

Why Networks Are Looking to Sri Lanka

Sri Lanka recorded record tourist arrivals in 2025 and set a target of three million arrivals for 2026. Its simplified tourist visa arrangements support that goal, while also lowering barriers for criminal groups seeking to move personnel across borders quickly.

Citizens of China, India, Russia, Thailand, Indonesia, Malaysia and Japan can enter on free tourist visas. Authorities are considering extending the scheme to another 39 countries. Tourist visas issued on arrival last 30 days and can be extended for up to six months, allowing time for a group to establish an operation.

Chinese authorities have identified Sri Lanka's advanced telecommunications infrastructure, strategic geographical location, relatively lenient visa policies and hospitable population as factors attracting transnational fraud groups.

Hotels, guesthouses and apartments provide premises for operations that need computers, phones and reliable internet access. Strong digital connectivity allows those requirements to be met across much of the island.

Smaller groups can also scatter when they anticipate police activity. A dispersed network operating from rented accommodation has more opportunities to move than a large compound tied to a single site.

The movement inland is already visible. After the Chilaw raid, authorities detained 134 foreign nationals in an operation covering several guesthouses in Anuradhapura and Mihintale. Anuradhapura is a semiurban city in the North Central Province.

Those locations show that the activity extends beyond coastal tourist accommodation. Less conspicuous premises inland can be harder to identify through community tips, while specialist police response capability is thinner. The combination of accessible accommodation, connectivity and mobility helps explain why enforcement in Southeast Asia can lead to new operations elsewhere.

How Trust Becomes a Tool for Fraud

Scam centres use personal relationships as well as technology to obtain money. In pig butchering schemes, perpetrators build a romantic relationship over time, gain a victim's trust and then introduce a fraudulent investment opportunity. The name refers to the agricultural metaphor of fattening livestock before slaughter.

These schemes, together with cryptocurrency investment fraud targeting people overseas, generate an estimated $40 billion in annual losses worldwide. Cryptocurrency gives the schemes a financial component, while the relationship supplies the trust needed to persuade someone to transfer money.

Former workers describe a staged process. A scammer first creates a friendship online, using shared interests and backgrounds to build confidence. The scammer then claims to be wealthy and invites the victim into an investment group where fake accounts describe invented financial successes.

Mentors guide victims toward fraudulent platforms that imitate legitimate companies such as Amazon or Lazada. Small initial returns encourage confidence. Victims then put in larger sums, which disappear when the scammers cut contact.

Da Long, a former specialist who spent nearly four years in Cambodia's online scam industry before leaving in mid-2024, described another version of this industrial fraud. In a single month, he defrauded 6,500 clients who put money into fake loan services.

Some clients intended to borrow only $2,500 but potentially lost thousands more. Manufactured errors and repeated demands for additional payments kept them sending money. Da Long said his company earned approximately $18 million in one month.

The common mechanism is an escalating commitment. A victim is persuaded that another payment will unlock a loan, correct a problem or secure a larger investment return. The operation keeps collecting money while controlling the information the victim sees.

Deportation and the Limits of Existing Laws

Sri Lanka has legislation relevant to these operations, including trafficking provisions in the penal code, the Computer Crimes Act and a recent Personal Data Protection Act. Its legal framework nevertheless does not adequately address the specific crimes associated with scam centres.

Pig butchering and cryptocurrency investment fraud aimed at victims overseas are not well captured by existing statutes. These schemes combine deception, financial transfers, digital platforms and activity across borders, making the response more complex than removing an unauthorized operation from a building.

Deportation has been the predominant response rather than prosecution. In a recent case, 125 Chinese nationals detained in Anuradhapura were deported after discussions with the Chinese government. China sent a special aircraft and a team of officials, including a doctor, to oversee the process.

Sri Lankan police have established a new cybercrime investigation bureau. Authorities are also seeking stronger mechanisms to prosecute operators of illegal scam centres, although the legal infrastructure for this particular threat remains underdeveloped.

The enforcement challenge therefore involves both the conduct of the operators and the status of the people found working for them. Some may have organized fraud; others may have been recruited through false promises and forced to participate.

Protection for Trafficking Survivors

UN officials have called for responses grounded in human rights law and standards. Their recommendations include explicitly recognizing forced criminality in laws against trafficking and guaranteeing the non-punishment principle for trafficking victims.

Forced criminality means compelling someone to commit an offence. The non-punishment principle protects a trafficking victim from punishment for unlawful acts they were forced to carry out. For scam centre investigations, this requires identifying the coercion behind a person's participation.

Victims also need coordinated, timely rescue operations and protection under the principle of non-refoulement. That principle concerns protection against being sent back to a place where they face serious danger.

Support after rescue must address trauma and the risk of reprisals or being trafficked again. Türk's account of survivors facing disbelief, stigma and further punishment explains why removal from a compound or a hotel is only one part of their recovery.

A Crime Network That Crosses Continents

INTERPOL's Operation Storm Makers II demonstrated the expanding international reach of trafficking linked to scam operations. Conducted in October 2023 after five months of investigative coordination, it involved more than 270,000 inspections at 450 human trafficking and migrant smuggling hotspots.

Authorities arrested 281 people for offences including human trafficking, passport forgery, corruption and telecommunications fraud. They rescued 149 trafficking victims. Sri Lanka participated alongside 26 other countries across Africa, Asia and the Americas.

Investigators uncovered cases involving 40 Malaysian victims lured to Peru. They also found Ugandan citizens diverted through Dubai to Thailand and then Myanmar. Those routes show how recruitment, transport and exploitation can span several countries.

China and Sri Lanka have intensified bilateral cooperation following the recent raids. Chinese authorities expressed full support for Sri Lankan enforcement while calling for protection of legitimate rights in accordance with law. The cooperation builds on their joint efforts in 2024, which led to arrests and repatriations.

Jacob Sims, a fellow at Harvard University's Asia Center, assessed the crackdowns as real but apparently driven by efforts to limit reputational, legal and financial risks arising from sustained official involvement in the industry. He identified increasingly sophisticated propaganda by states sheltering scams, alongside relocation to other countries, as factors in the industry's persistence.

Sims also identified Sri Lanka as reportedly becoming the next destination for scam workers displaced from Cambodia. Taken together, the raids, changing premises and movement across borders explain the central difficulty: enforcement can disrupt a location while the network behind it moves elsewhere.

The Essentials

• Police detained 152 foreign nationals in Chilaw and seized 143 laptops, 120 desktop computers and 370 phones.
• Arrests during the first quarter of 2026 exceeded half Sri Lanka's 2025 total; the current pace could produce more than 600 arrests this year.
• Cambodia raided 2,709 suspected locations in February 2026 and identified more than 21,000 foreign nationals as potential suspects.
• Prince Group chairman Chen Zhi was arrested on January 6 and swiftly extradited to China.
• Scam networks are shifting toward smaller operations in hotels, guesthouses and apartments, including premises in Anuradhapura and Mihintale.
• The UN Human Rights Office documents severe abuse of people trafficked into scam operations and calls for protection of those forced to commit crimes.
• Sri Lanka has relied mainly on deportation while developing stronger investigative and prosecution mechanisms.
• International investigations show that trafficking and fraud networks extend across Africa, Asia and the Americas.