The crackdown on scam compounds in Cambodia is leading some gangs to relocate to beach resorts and office buildings in Sri Lanka, in what may be the next phase of one of the world’s fastest-growing criminal industries.

A combination of visa-free travel, available building space, relatively strong telecommunications networks and a well-established informal money transfer system make the South Asian island nation an appealing destination for scammers, investigators say.

Authorities in Sri Lanka have set up a new cybercrimes unit and say they’ve arrested more than 1,000 people this year alone, most in western beach areas where tourists flock or in the capital, Colombo. “Police, along with the immigration department and the central bank, are working as a collective effort to see that this is being controlled,” said assistant police superintendent Fredrick Wootler. 

Still, observers say the country has a brief window to get its arms around what are fast-moving and increasingly sophisticated operators. “In Sri Lanka there are issues with implementing our laws, the fact that we don’t necessarily crack down on these companies – they simply use tourist visas,” Dilrukshi Handunnetti, director at the Centre for Investigative Reporting Sri Lanka, said.

When officers descended on one west coast property in April, they found more than 150 foreign nationals allegedly running a cyber-scam operation. Days later, police raided a multistory apartment building near Colombo and arrested another 120 foreign nationals.

As authorities step up the pressure, some operators appear to be shifting from large compounds to hotels, apartment buildings and office space that can be rented quickly and abandoned just as fast.

“This is happening in ways that are unfortunately even more difficult for us to keep our eyes on,” said Erin West, founder of anti-scam nonprofit Operation Shamrock. “I think we’ve created such skilled workers, whether they wanted to be or not, that they can operate really in any kind of environment.”

A report by a US congressional committee in July last year warned fraud networks appear to be relocating into environments marked by “regulatory stress” – jurisdictions with weak enforcement capabilities but strong digital infrastructure. 

Some of the suspected centres in Sri Lanka may be staffed by escapees from Southeast Asia’s scam centres who, with limited alternate work opportunities, are choosing to put their newfound skills to use, scam investigators said. 

Sri Lanka’s ascendancy reflects a broader pattern of scam operations that are appearing far beyond their traditional strongholds in places like the United Arab Emirates, Timor-Leste, Fiji and parts of Africa, raising concerns transnational gangs are becoming increasingly global.

China is one country paying attention. It was Chinese pressure in part that led Cambodia, a key ally, to clamp down earlier this year. The Chinese embassy in Sri Lanka released a statement in mid-March saying it was “closely following” reports of arrests of suspected scammers, including Chinese nationals. 

“Cases like these pose immense harm,” the statement said, citing the country’s developed telecommunications infrastructure, favourable geographic location and the “kindness and friendliness of its people” for an increase in scam operations.

There’s also a long history of Chinese workers living and working in Sri Lanka, in part due to Beijing’s Belt and Road infrastructure projects, potentially making it easier for scam operators to disappear into the diaspora.

“It’s not unusual to see entire apartment complexes and shopping complexes, and sometimes even neighbourhoods inhabited by Chinese,” said Sanjana Hattotuwa, an independent researcher who has spent more than two decades writing about Sri Lanka.

Sri Lankan authorities should look to other countries, including Vietnam and the Philippines, on how to prevent scam operators taking hold, versus Cambodia where they clearly did, according to Julia Dickson, an associate fellow at the Center for Strategic and International Studies.

“It comes down to, are officials keen to actually take action, or are they benefiting substantially like those in Cambodia?,” she said. Sri Lanka ranked 107 out of 182 countries and territories in Transparency International’s 2025 Corruption Perceptions Index, just above Algeria, Bosnia and Herzegovina and Laos.

A representative of Sri Lanka’s ministry of Foreign Affairs, Foreign Employment and Tourism didn’t immediately respond to a request for comment.

Sri Lanka currently allows visa-fee free entry for about half a dozen countries, including China, and has approved plans to increase that to 40 to boost tourism. Visitor arrivals increased again in May after slowing in March and April, likely due to the prolonged conflict in the Middle East. 

It’s too soon to know if human trafficking is occurring with the scam operations in Sri Lanka, according to Stephanie Baroud, a criminal intelligence analyst with the human trafficking and migrant smuggling unit at Interpol in Lyon. “It’s not yet something that is acknowledged” or reported, she said. But she added loose visa policies can be an enabling factor in trafficking.

Sri Lanka also lacks a legal framework equipped to tackle cyber-scam operations, while easy access to SIM cards and widespread connectivity have made it an attractive base for fraud networks, according to Hattotuwa. The country’s informal Undiyal money-transfer system may also provide a grey-market channel for moving scam proceeds, including cryptocurrency, beyond the reach of regulators.

Sri Lanka’s Financial Intelligence Unit is working with local law enforcement agencies in combating illicit fund flows, according to Central Bank Governor Nandalal Weerasinghe. He declined to comment on whether Sri Lanka is working with foreign authorities.

One immediate imperative is better sharing of information on what is happening in Sri Lanka. Cuts to US foreign aid have weakened civil society groups that often provide early warnings about emerging scam hubs.

“We have a lot less information about what’s going on on the ground,” said CSIS’s Dickson, making information sharing even more critical to tracking fraud networks. (Bloomberg)

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Venerable Omalpe Sobitha Thero on Saturday (30) submitted a special letter to Minister of Foreign Affairs Vijitha Herath, conveying a united appeal from the four Mahanayaka Theros of Sri Lanka for peace and harmony between Thailand and Cambodia.

The letter, jointly signed by the Most Ven. Tibbotuwawe Sri Siddhartha Sumangala Mahanayaka Thero (Malwatta Chapter), the Most Ven. Warakagoda Dharmasiddhi Sri Gnanarathana Mahanayaka Thero (Asgiriya Chapter), the Most Ven. Makulewe Sri Wimala Mahanayaka Thero (Ramanna Sect), and the Most Ven. Karagoda Uyangoda Maithri Murthi Mahanayaka Thero (Amarapura Sect) expresses deep concern over the conflict that has arisen between the two nations.

While the dispute concerns the ownership of an ancient temple, the letter emphasizes that exploiting religious sentiment for conflict is against the teachings of the Buddha. 

The Mahanayaka Theros urged both governments, as well as religious leaders and practitioners in Thailand and Cambodia, to uphold the noble heritage of Buddhism by resolving differences peacefully and fostering harmony.

“As followers of the Buddha, it is our bounden duty to ensure that his teachings of peace and non-violence are maintained in practice,” the letter states, reminding that history has shown the vital role monks have played in preventing violence and nurturing coexistence. (Newswire)

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The United Nations Security Council is due to hold an emergency meeting on Friday to discuss the ongoing border clashes between Thailand and Cambodia.

A long-running border dispute erupted into intense fighting on Thursday, with violence flaring near two temples on the border between Thailand’s Surin province and Cambodia’s Oddar Meanchey.

Both countries blame the other for triggering the latest clashes.

While Cambodia fired rockets and shells into Thailand, the Thai military scrambled F-16 jets to hit military targets across the border.

They also claimed that Cambodia was using heavy weapons, including artillery and rockets.

“Cambodian forces have conducted sustained bombardment utilizing heavy weapons, field artillery, and BM-21 rocket systems,” the Thai military said in a statement. “Thai forces have responded with appropriate supporting fire in accordance with the tactical situation.”

Thailand’s acting Prime Minister Phumtham Wechayachai warned on Friday that the cross-border clashes “could develop into war.”

“We have tried to compromise as we are neighbors, but we have now instructed the Thai military to act immediately in case of urgency,” said Wechayachai.

“If the situation escalates, it could develop into war — though for now, it remains limited to clashes,” he told reporters in Bangkok.

The Thai Interior Ministry said the death toll on their side had risen to 14. It added that over 100,000 people from four border provinces had been moved to nearly 300 temporary shelters.

Meanwhile, Cambodia confirmed on Friday its first fatality.

A Cambodian provincial official said on Friday that at least one Cambodian civilian was killed and five others injured.

Around 1,500 Cambodian families from Banteay Ampil district in the Oddar Meanchey province near the conflict zone have been evacuated to safety, Meth Meas Pheakdey, a spokesperson for the provincial administration, said on Facebook.

What is the conflict about?

The two nations are locked in disagreement over the Emerald Triangle — an area where the borders of both countries and Laos meet, and home to several ancient temples.

Thailand and Cambodia, which share an 800-kilometer (500-mile) frontier, have been arguing over where the border should be drawn for years.

Dozens of kilometers in several areas are contested.

Fighting broke out between 2008 and 2011, but a UN court ruling in 2013 settled the matter for over a decade. (DW)

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The Thai military on Monday ordered the closure of permanent and temporary border checkpoints along the Thai-Cambodian frontier, with exceptions granted solely for humanitarian purposes.

According to a directive issued by the 1st Army Region, the decision comes amid escalating tensions following reports of Cambodian military incursions into Thai territory.

These include unauthorised patrols, the reinforcement of military outposts, and terrain modifications, as well as symbolic actions by Cambodian civilians in areas under the 2nd Army Region’s jurisdiction. These activities have reportedly jeopardised border security and contributed to rising tensions along the frontier.

The statement noted that the situation has adversely affected Thai citizens living near the border and could impact cross-border movement in areas overseen by the 1st Army Region. 

In addition, the rise in cross-border criminal activities—particularly involving call centre gangs and hybrid scams—has posed serious threats to public safety and property both within Thailand and across the region.

In light of these developments, and its role as the unit responsible for border security in Sa Kaeo province, the 1st Army Region announced the following immediate measures in the interest of national security and the safety of Thai citizens:

• All cross-border vehicle movement is suspended.
• All pedestrian border crossings by the public, including tourists—both Thai and foreign—as well as all forms of trade, are suspended.
• However, the order allows for humanitarian exemptions on a case-by-case basis. These include medical emergencies requiring urgent cross-border transfers, educational needs of students, and other essential matters necessary for daily life.

The 2nd Army Region has issued a similar order to tighten border control measures at key crossings in response to ongoing Cambodian military incursions and cross-border criminal activity.

The directive, released on Monday, targets the permanent border checkpoints at Chong Chom in Surin province and Chong Sa-ngam in Si Sa Ket, as well as the temporary commercial crossing at Chong Sai Taku in Buri Ram.

The 2nd Army Region cited violations of Thai sovereignty by Cambodian troops, including unauthorised patrols, the reinforcement of military outposts, terrain modification, and the symbolic presence of civilians near the Ta Moan Thom and Ta Krabei temples. 

The situation has been further compounded by the growing presence of transnational criminal operations, including call centre and hybrid scam networks.

To express disapproval of these actions and safeguard national interests, the following measures have been implemented at the three border points:

• All cross-border vehicle movement is suspended.
• All pedestrian crossings, trade, and tourism—by both Thai and foreign nationals—are suspended.
• As with the 1st Army Region’s directive, limited humanitarian exemptions will be granted on a case-by-case basis. These include urgent medical transfers, education for students in the border areas, and essential household trade involving fresh produce and basic goods deemed necessary.

The Chanthaburi-Trat Border Defence Command has issued an order to tighten controls at all permanent and temporary commercial checkpoints in the two eastern provinces, in line with directives from the National Security Council and the Royal Thai Navy.

The order affects six locations: Ban Laem and Ban Pakkad permanent checkpoints, and Ban Subtaree and Ban Suan Som commercial crossings in Chanthaburi province, as well as the Ban Hat Lek permanent checkpoint and Ban Mamuang commercial crossing in Trat province.

In response, the marine task forces in Chanthaburi and Trat have been instructed to strictly enforce controls on all cross-border movement of tourists, traders, and labourers through the affected checkpoints:

• Suspension of all cross-border travel by the public, including Thai and foreign tourists, as well as all forms of trade.
• Suspension of all cross-border vehicle movement.
• Limited humanitarian exceptions will be allowed, including emergency medical transfers, educational travel for students in the area, and essential household trade involving fresh produce and basic necessities. (National Thailand)

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At a ceremony in August, Cambodia’s leader Hun Manet knelt to receive blessings from saffron-robed monks as fireworks and balloons heralded the breaking of ground for a canal he hopes will transform his country’s economic fortunes.

Addressing hundreds of people waving the Cambodian flag, Mr Hun Manet said China would contribute 49 per cent to the funding of the Funan Techo Canal that will link the Mekong River to the Gulf of Thailand and reduce Cambodia’s shipping reliance on its neighbour Vietnam.

Cambodia’s government estimates the strategic, if contentious, infrastructure project will cost US$1.7 billion (S$2.28 billion), nearly 4 per cent of Cambodia’s annual gross domestic product.

But months later, China’s financial contribution remains in doubt.

Four people directly involved in the investment plans or briefed about them told Reuters Beijing has expressed misgivings about the project and has not made definitive commitments on its funding.

“It is normal business practice for Chinese companies to assist Cambodia in exploring the construction of comprehensive water conservancy projects in accordance with market principles,” China’s foreign ministry said in an e-mailed statement to Reuters when asked about the canal.

The Chinese ministry did not answer a direct question about the funding but said the two countries were “ironclad friends”, a comment echoed by Mr Hun Manet in late October.

Cambodia’s government declined requests for interviews, and its press officers did not reply in recent weeks to requests for comments about the canal’s funding.

China’s lack of clear commitment could jeopardise the entire plan, given uncertainty over the project’s costs, its environmental impact and financial viability, experts, officials and diplomats say.

It also underscores how Beijing is drastically downsizing its overseas investments as its domestic economic struggles, even in countries it considers strategic partners, such as Cambodia.

Once a prime example for Western-backed “nation-building” after the long civil war that followed the fall of the Khmer Rouge regime, Cambodia has in recent times been widely seen by diplomats and foreign policy experts as a Chinese client state, owing to Beijing more than one-third of its total state debt.

But Chinese investment in the South-east Asian nation is now plunging, after a series of unsuccessful infrastructure projects, amid concerns over criminal gangs targeting Chinese nationals, and dropping tourist numbers.

Differing narratives

The 180km canal would greatly expand an existing waterway and divert water from the fragile rice-growing Mekong Delta to the Gulf of Thailand, cutting Cambodian shipping through Vietnamese ports.

In the months after the Cambodian government signed an “investment framework agreement” in October 2023 with China Road and Bridge Corporation (CRBC), a state-owned construction company, Cambodian officials went public about China’s financial involvement. The text of the deal is not public.

In an interview with Reuters in May, the minister in charge of the project, Deputy Prime Minister Sun Chanthol, said CRBC would develop the canal and “totally” cover its costs, getting a multi-decade concession in return.

But at the August groundbreaking, the prime minister put CRBC’s share in the project at 49 per cent, with the remainder covered by Cambodian companies.

The same day, his father and Cambodia’s decades-long leader Hun Sen posted a statement on Facebook calling on Japan to invest in the canal.

China’s official Xinhua News Agency did not mention any Chinese involvement in its report about the groundbreaking.

A few days later, a communication officer for Mr Sun Chanthol told Reuters that ownership for the canal’s section to be developed together with CRBC remained “to be determined”.

When asked about Cambodian assertions that CRBC would have a 49 per cent stake, an official for the company told Reuters in mid-October the figures circulating publicly were not definitive.

“It’s very complicated,” said the official, who did not elaborate.

CRBC and its parent company did not reply to requests for comment.

One person directly involved in the investment plans told Reuters in early November there was no Chinese money on the table at that stage, confirming the account from another official.

A source from one of the Cambodian investors in the project said it would not be a surprise if China did not invest in the canal at all.

A fourth official briefed on the matter said China earlier in 2024 had privately criticised Cambodian officials for announcing Chinese funding for the project that had not been decided.

They all declined to be named because of the issue’s sensitivity.

More than three months after groundbreaking, the site of the ceremony on the bank of the Mekong laid abandoned, a Reuters reporter observed.

China investment down

Dithering over the canal comes as Chinese official development assistance to Cambodia, including infrastructure funding, is falling.

China’s disbursements to Cambodia are projected to drop to US$35 million in 2026 from more than US$420 million in 2021.

There have been no new Chinese loans in the first half of 2024, down from US$567 million in 2022 and US$302 million in 2023, according to Cambodian official data.

Chinese funding for overseas projects is also falling elsewhere, but in Cambodia the impact “could be very pronounced”, said Ms Grace Stanhope of the Lowy Institute, a Sydney-based think tank.

China is still building roads and other infrastructure but has pulled out from the construction of the new Phnom Penh airport, where it had initially committed US$1.1 billion.

That disengagement came as an expressway built by CRBC connecting Phnom Penh to the coastal city of Sihanoukville remained under-utilised by Cambodian motorists and truck drivers who to avoid tolls prefer the crowded but free old road, a Reuters reporter observed, confirming accounts from multiple Cambodia-based officials.

Another recently completed Chinese-backed airport at Siem Reap to serve the Unesco world heritage site of Angkor Wat “is very quiet”, said Mr Ou Virak, head of Cambodian think tank Future Forum, noting investors may face losses.

Chinese private investment remains high, but multiple Phnom Penh-based diplomats and financial experts point to once large inflows of Chinese informal funds destined to the gambling industry and real estate sector having dried up.

Chinese tourism, once a major source of income for Cambodia, has also struggled to recover from the Covi-19 pandemic.

That has coincided with a prolonged Chinese campaign warning tourists of risks linked to an online scams industry in Cambodia.

As relations between China and Cambodia evolve, the canal project’s fate and its sustainability remain uncertain.

“With so many unknowns, it’s no surprise to me that investors are getting cold feet on this project and have yet to show up with their money in hand,” said Mr Brian Eyler, an expert on the Mekong region at US-based think tank Stimson Centre. (Reuters)

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