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China Forces Myanmar Scam Syndicates to Move to Thai Border

April 22nd, 2024  •  Author:   United States Institute of Peace  •  12 minute read
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While Myanmar has long been the chief venue for the criminal operations of Chinese-origin gangs in Southeast Asia, these organizations have always stood ready to move — internally or across borders — if their sources of protection dissolved. In recent months, the organized crime kingpins have once again faced a fraying safety net. This time, the cause is the weakening of Myanmar’s corrupt coup regime in the face of a rising, multi-front revolution and, perhaps more importantly, an aggressive push by China’s law enforcement authorities.
China’s campaign has forced many scam centers along its border in northern Shan State to close and more to migrate to Karen State. Repatriation of almost 45,000 people from the scam syndicates’ compounds, including major crime bosses, has provided Chinese authorities with new intelligence on the Myanmar military’s profitable involvement with the centers. That has resulted in China’s demand for the arrest of a number of senior officers, shaming of the junta and eroding the army’s ability to protect its criminal interests.With the demise of scamming enclaves like Kokang in northern Shan State, some of the syndicates have relocated to Laos and Cambodia, and others have regenerated in Myanmar.   Some of the criminal activity persists in eastern Shan around Tachileik and in the territories controlled by the United Wa State Army and the National Democratic Alliance Army (Mongla). But the vast majority has been absorbed by criminal zones in Karen State on the Thai border, while the Karen militia forces harboring them have realigned to distance themselves from the junta to better secure their criminal empires.These moves have played into escalating conflict on the Thailand border, as various armed groups in Karen now see the coup regime as more liability than protector for illicit business.  Curiously, neither Chinese nor Thai law enforcement seem willing or able to challenge these operations, and the Karen armed groups protecting them remain openly defiant.

As these criminal gangs increasingly turn to lucrative U.S. victims, it is time for the United States to encourage Myanmar’s neighbors to form a multi-country task force that can tackle the Karen sanctuary and cut the inter-state ties that connect the criminal networks and allow them to sustain their malign activities.

China Moves Against Chinese Criminal Networks in Northern Shan State

As USIP reported earlier, between May 2023 and January 2024, China took action against the many scam centers operating along its borders in the Kokang, Mong La and Wa areas of northern Shan State. Chinese law enforcement pressured local armed groups and the Myanmar army’s Border Guard Forces (BGF) hosting the centers to close them down and release their largely Chinese slave labor workforce.

This operation had a direct effect on the course of internal conflict in Myanmar: It gave the Kokang Myanmar National Democratic Alliance Army (MNDAA), aligned with other anti-coup forces, the opportunity to expel the rival Kokang BGF that was operating the scam centers and eradicate the centers in one blow. This victory for the MNDAA — with Chinese acquiescence — became the opening shot for a coordinated assault on military posts along all of Myanmar’s borders over the next few months. Today, anti-coup forces, having overrun hundreds of military posts around the country’s periphery, control all the major border crossings with Bangladesh and India on the west, and increasingly with China and Thailand on the north and east.

Most recently, China has begun to implicate senior members of the Myanmar military with involvement in the Kokang scam centers, based on information gained from interrogation of Kokang BGF leaders taken to China under arrest for operating the centers. Chinese authorities are reportedly pressing the Myanmar regime to arrest these individuals. In Karen State, Chinese authorities have worked closely with the military regime and Thai authorities to secure repatriation of over 900 Chinese nationals held in compounds around Myawaddy but have refrained from the direct action they took in Shan State and have not issued arrest warrants for the Karen BGF or other militia leaders involved in criminal activity targeting China.

Cracking the Complex Crime Syndicate Problem in Karen

The dozens of scam centers established in Karen State by Chinese-led crime networks have grown visibly along the Thai border since the compounds on the Chinese frontier shut down.  However, Chinese government pressure on the junta’s entanglement with the Kokang scamming operations seems to have triggered a curious realignment of Karen armed groups, namely the Karen Border Guard Force led by General Secretary Maung Chit Thu. He is one of three key leaders of this BGF directly involved in hosting many Chinese scam centers.

Under the authority of the Myanmar military since 2010, when the Democratic Karen Buddhist Army (DKBA) was pressed to come under military command as a BGF, the Karen BGF claimed in early 2024 to have severed ties with the Myanmar army. It declared neutrality in the country’s internal conflict and rebranded itself as the Karen National Army (KNA). Regardless, Chit Thu’s BGF/KNA has apparently maintained some level of involvement with the junta regime as evidenced by the leading role it played in delivering cross-border aid from Thailand in late March.

The military’s weakening position also opened space for the Karen National Union’s (KNU) armed wing, the Karen National Liberation Army (KNLA), to attack the military in Myawaddy in early April to liberate the township. By mid-April, the KNLA had captured the military’s key base in Myawaddy, announcing plans on April 14 to install self-governance and border management.

Although the KNA has not engaged directly in this conflict, it has failed to provide the critical logistical and tactical support to the military that is required by the BGF agreement, thereby constraining the junta’s ability to mount its standard bombing campaign and counter offensive. The KNA has also assisted the KNLA to a degree by accommodating IDPs and even taking over control of some military POWs captured by the KNLA and transferred over to the BGF in its compounds. But Chit Thu has remained focused on reinforcing his crime empire and ensuring that it retains access to key support services, such as security, communications connectivity and electricity. Neither Thai nor Chinese law enforcement has moved actively against him or two other BGF leaders involved in the criminal activity, while the junta’s ejection from the area leaves it effectively powerless to do so, even under Chinese pressure.

The network of scam centers in Karen State presents a more complicated set of conflicting interests than existed along China’s border, where the fraud schemes were all run by local Chinese-speaking armed groups subject to considerable Chinese influence. In Karen, a wider set of internal and international actors makes organizing law enforcement action more difficult. As a result, Chinese network operators and local hosts have more freedom to forge ahead with expansion.

Naming Names

Key Karen actors involved in providing space and security for criminal activity, and otherwise fully complicit in it, include the following:

  • The KNA/BGF: with three key individuals, Maung Chit Thu, Mote Thun and Tin Win Major Tin Win, a direct subordinate to Chit Thu, has been responsible for supporting the Chinese crime groups, including arranging for electricity and internet from Thailand. Chit Thu and Tin Win host, support and profit from scam compounds near Myawaddy, including Shwekokko, Jinxin, Hengsheng and Dongfanghui, which is operated by the now defunct Kokang BGF Fully Light Group. Also under their control is the notorious KK Park Project, which has been heavily involved in scams targeting Americans. Tin Win is also known to be involved with Roger Khin in the Huanya Project (see below). These compounds are some of the most notorious, where human rights abuses inside are extreme.
    Lt. Col. Mote Thun, a founding member of the Karen BGF with Chit Thu, is the deputy general secretary of the BGF/KNA. In practice, his power and influence almost equal Chit Thu’s, particularly south of Myawaddy township. Key compounds under his control include Wan Kuok-Koi’s (aka Broken Tooth) Dongmei Zone, which has avoided the international attention drawn to Chit Thu’s compounds. Mote Thun is also said to be involved in the KK Park Project.
  • The DKBA, with Sai Kyaw Hla as the key perpetrator
    The Democratic Karen Benevolent Army was formed by elements of Chit Thu’s militia that refused to accept the BGF agreement in 2010, and which later became a signatory to the national cease-fire accord. Sai Kyaw Hla is from northern Shan State, where he has a prior criminal record. He relocated to the Karen area, after which he emerged as a DKBA leader and brigadier general by the mid-2010s. In 2020, he initiated the Taichang Zone (aka Ko Sai Casino or Kyauk Khat Casino) in partnership with a Chinese mafia group, the TransAsia International Company, that relocated from Sihanoukville to Maesotin 2020. This zone, located along the Moei River next to Wat Chong Khaep on the Thai side of the border began to expand rapidly in early 2023, becoming a magnet for Chinese crime syndicates in late 2023 when the Kokang centers were effectively closed. A second DKBA zone is located even further south at Waw Lay, and is the newest and least understood of the criminal enclaves. The DKBA remains largely neutral vis-à-vis the Myanmar army and anti-junta resistance groups, such as the KNU.
  • Individuals associated with the KNLA, especially its Brigade 7: Roger Khin
    Roger Khin, from the KNU Defense Department and a senior officer in KNLA Brigade 7, is the key individual involved in Huanya project, which is yet another notorious scam hub. KNU sources indicate that this project also involves Tin Win from the BGF.  Roger Khin is also said to be involved in the KK Park project, but no evidence of this has been produced yet. Roger Khin partners primarily with the Chinese mafia group controlling the TransAsia International Company, which partners with the DKBA.  Despite this, of all of the various armed groups in the area, the KNU is the most resilient against involvement in this criminal activity; it maintains a no-tolerance policy with respect to casinos, drugs and other illicit activities.

In this rapidly evolving situation, three key points stand out:

  1. Unlike its defeat on the Chinese border, where China’s influence over local forces allowed Chinese law enforcement greater access, the Myanmar military’s collapse in Karen State has not affected the scam centers significantly because outside influence on the perpetrators is much more diffused. Most importantly, the Karen BGF has been highly adaptive following the collapse of the Kokang BGF, and Chinese law enforcement seems less inclined to tackle the scamming operations on borders other than its own, perhaps because access would require the cooperation of other governments.
  2. The vast majority of the scam syndicates in Karen State are operating in zones controlled by Saw Chit Thu’s BGF, now rebranded as the KNA. He and his cohorts care little about the cause of Karen autonomy and democracy pursued by the KNU/KNLA but focus instead on maximizing profits from criminal activity. With a powerful and well-financed fighting force of more than 8,000 troops, neither the military nor the BGF/KNA wish to engage in direct conflict. They are said to enrich the Myanmar army with some 50 percent of the $192 million earned by the BGF/KNA annually from the Shwekokko Project.
  3. Addressing issues related to human trafficking and repatriation is becoming more complex as the number of actors expands, and it is time for the U.S. and regional governments, especially Thailand, to exert leadership in supporting a strong and timely response to the situation in Karen state and its connection to the regional Chinese criminal network as a whole.

The Shape of an International Response

An effective response to the criminal scamming in Myanmar will require a multi-national effort to tackle not only the Karen State sanctuary, but also its ties to scam networks operating across the region, which facilitate flexible transfer of criminal operations within Southeast Asia and beyond.

The tasks of a multi-country effort would include:

  1. Cutting cross-border services to the enclaves in Karen State and mounting an international law enforcement task force to bring key operators to justice and facilitate rapid repatriation of the enslaved labor force from the scam centers.
  2. Disrupting connectivity between the criminal networks operating in Myanmar and their partners in other countries and territories, especially Cambodia, China, Hong Kong, Laos, Dubai, the Philippines, Singapore and Malaysia. This would require the compilation of a global watch list of companies and individuals involved in cross-border activity in known criminal zones within the Moei River area.
  3. Providing robust support and cooperation with the KNU police to strengthen their ability to investigate, disrupt, seize and arrest the perpetrators, and to remain resilient vis-à-vis efforts by the KNA and DKBA to capture or co-opt them. In the current situation, Thailand has very significant leverage as it looks to reset trade on the border. One potential option would be to re-open Myawaddy port for trade only with a party that agrees to help eradicate the scam compounds. The KNU could be a logical choice for such a partnership.
  4. Following the example of the United Kingdom in sanctioning key criminal actors in the Karen scam operations. In December of 2023, the U.K. placed sanctions on three individuals involved in the criminal activity. China should also be encouraged to issue arrest warrants for known criminal actors involved, as it has done in the case of scam compounds on its border.

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