Why China’s War on Scammers Is Fueling a Literal War in Asia

One of my biggest complaints about CISOs, fraud managers and data scientists is that they sometimes fail to step away from data to look at the irreducible variety and complexity of life. Being too narrow can have practical consequences as well. For example, if you fixate on the fact that a crime involves the making of a telephone call then you may also fixate on methods of determining the origin of the call, or on ways to block the call. There will be other ways to tackle the same crime, such as tracing the flow of money which occurred after the call ended, and arresting the person who received that money. The cyber world is increasingly interleaved with the rest of life, even in the case of warfare. Generals who previously commanded infantry and artillery may now oversee divisions of hackers too. But if cyber warfare can be motivated by a real-world goal such as acquiring territory, then it follows that troops and guns may sometimes be used to tackle a problem enabled by comms networks. Multiple wars have dominated recent worldwide news, but it is unfortunate that so little attention is being paid to the conflict in the region of Myanmar that borders China, as this war is heavily influenced by the Chinese government’s desire to shut down the scam call centers based there. These call centers are not just a threat to ordinary users of phones and the internet. There is also comprehensive evidence showing people are being abducted and trafficked so they can be forced to work as slaves inside them.

Two months ago Commsrisk published the story of over 1,200 people who worked in scam call centers being liberated by an insurgent Myanmar army and transported to Chinese custody at the border. To recap, this exercise was conducted by the United Wa State Army (UWSA) in the neighboring province of Shan. Myanmar, previously known as Burma, has a sad and bloody history of fighting between central government forces controlled by the largest ethnic group and rebel militia associated with ethnic minorities. Outsiders may be aware of the struggles of the democracy movement, led by Aung San Suu Kyi, who has spent decades under house arrest, and is once again being confined following a military coup in February 2021. They are less likely to have heard of ethnic groups like the Karen and Kachin who have opposed central government control before, and who are again fighting the current military dictators. This context is vital for understanding how relatively lawless regions can exist within Myanmar’s borders, where there are office blocks connected to the internet and foreign nationals are forced to operate lucrative scams. The Chinese government’s desire to shut down the scam call centers that target their population is key to understanding why this week a rebel faction known as the Myanmar National Democratic Alliance Army (MNDAA) surrounded the notorious scam town of Laukkai, which sits just a couple of miles from the border with China. Per Barron’s:

Run since by a pro-military militia, analysts say [Laukkai] is home to online scam centres where trafficked citizens of China and other countries are forced to work scamming their compatriots online.

The scammers typically target their compatriots and groom them for weeks before cajoling them into ploughing money into fake investment platforms and other ruses.

The scams anger China, a major ally and arms supplier of the junta, and Beijing has repeatedly asked the military to crack down on scam centres.

Even a rebel government needs to tax somebody, so it makes sense for de facto governors in Myanmar’s breakaway regions to turn a blind eye to crimes committed in scam centers so long as they receive a percentage. By definition, these scam centers target victims who live elsewhere. China is trying to rebalance the equation by encouraging factions that prioritize the capture and closure of scam centers. And military commanders who target scammers may now profit more directly, as Chinese police last week began to offer rewards of up to RMB500,000 (USD69,000) for information leading to the capture of scammers, including the four individuals shown in the wanted poster above: Ming Xuechang, Ming Xiaoping, Ming Julan, and Ming Zhenzhen. Ming Xuechen represents the Union Solidarity and Development Party (USDP) in the Shan State parliament, and the USDP are allies of Myanmar’s military dictatorship. This comes soon after the deputy military chief of UWSA, a rival faction, was arrested in China on suspicion of his involvement in online scams. The Chinese are clearly not concerned about which side they support or oppose, so long as action is taken to stop scams.

The scale of suffering in these scam centers should not be ignored. Figures cited by the United States Institute of Peace, a US federal body tasked with promoting conflict resolution, estimate there are between 20,000 and 30,000 people forced to work in over 100 scam compounds on Myanmar’s side of the border with China. Most of these unwilling scammers are Chinese nationals who were abducted and carried over the border or lured to Myanmar by bogus promises of work. Chinese outlets have been reporting that up to 60 Chinese nationals may have been shot and killed as they attempted to escape a scam center controlled by Ming Xuechen. These outlets have been ramping up the publicity about the crackdown on call centers. This includes terrible stories about torture being printed in the press, and captured scam kingpins making public video confessions where they warn peers of violent reprisals if Chinese citizens are not released. But these scam centers target victims who speak other languages too, so they also enslave other nationalities. This week saw the release of 19 Koreans from a Myanmar scam center, and the escape of a Ugandan IT professional. The latter said he was routinely beaten and had seen others being murdered or having their fingers cut off if they refused to conduct scams as ordered.

War may not seem like much of a solution to any problem. However, the violence in Myanmar should serve as a warning about the danger of allowing criminal greed to succeed unchecked. Organized criminals are motivated by money, but they are willing to do things which are far worse than stealing. They will keep growing their criminal empires as large as they can. If laws are not enforced and ordinary people are not protected than the intervention needed to dismantle these criminal empires will then need to be much more robust. Let us not be complacent about the extent to which the profits generated by phone and online scams will lead to suffering if we do not vigorously employ every method to curb these crimes.

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.