Online scam organizations that had been operating along the Cambodia-Myanmar border are shifting their bases to Sri Lanka, an island nation in the Indian Ocean, to evade crackdowns by various countries. Sri Lankan police have arrested more than 1,000 foreigners on suspicion of cybercrime in less than six months this year. That is more than double the total of 430 arrests for all of 2024.
According to Bloomberg on the 10th (local time), Sri Lankan investigators recently established a dedicated cybercrime unit and expanded their crackdown. Many of the foreigners arrested were Chinese, followed by Vietnamese and Indians. Sri Lanka police Spokesperson Fredrick Uthlah told AFP in May, "In recent weeks, the scale of these organizations has become clear," and "even now, we get a lot of calls to police every day."
Southeast Asia's scam industry originally grew through a large-complex model that fused casinos and online gambling, extraterritorial special economic zones, and corrupt local power. The method is to confine workers inside barbed-wire compounds and force them to work. In January, Cambodian authorities arrested Chen Zhi, the chairman of Prince Group, who represented this model, and extradited him to China. The U.S. Department of Justice said he ran Cambodia's forced-labor scam compounds and caused billions of dollars in losses to victims worldwide, and it began proceedings to seize about $15 billion (about 23 trillion won) worth of bitcoin.
Despite intensive crackdowns across Cambodia, online scam organizations are still rampant. According to an Amnesty International report cited by Reuters, of 86 suspected scam centers in Cambodia, only 24—less than a third—were found to have government intervention. There was also testimony that suspects involved in fraud crimes moved to other regions or across borders during crackdowns. Instead of disbanding, these groups changed their operating model to split up into smaller, faster units.
Sri Lanka is where this shift is most evident. According to Sri Lankan police, members entered as tourists and rented beach resort villas, apartments near the capital Colombo, or offices for short periods to use as scam offices. At any sign of a crackdown, they grabbed only their laptops and phones and moved to another city. In fact, in March this year, Sri Lankan police arrested 135 Chinese nationals in a single raid on an undisclosed online scam hub.
The very next month, in April, they raided a hotel in Chilaw, a northwestern tourist spot famous for Hindu temples and beaches, and arrested 152 people. Of those arrested, 133 were Chinese. The same month, Sri Lankan customs caught nine Chinese nationals trying to smuggle in hundreds of used phones and laptops. Used phones and laptops are essential equipment that call center-style scam groups bring in every time they set up a new office. Around the same time, 120 foreigners were arrested on similar charges at a multi-story apartment near Colombo. Along the southern coasts of Galle and Matara, five raids in a single night netted 192 Indians and 29 Nepalis. As similar crimes spread, Sri Lankan police warned that landlords who rent villas or apartments to suspected groups could also be punished for aiding and abetting.
Experts cite four factors behind why Chinese crime groups moved far from nearby Southeast Asia to an island nation in the Indian Ocean: entry barriers, operating space, telecommunications quality, and ease of moving funds. After its economic crisis, Sri Lanka allows 30-day visa-free entry for nationals of key countries such as China, India, and Russia to attract foreign currency and tourists. For a fee, stays can be extended for up to six months. The government plans to expand visa-free entry to 40 countries. The telecommunications networks, essential for multilingual chats, video calls, and running fake investment platforms, are stable, and SIM cards for burner phones are easy to obtain.
An informal remittance network known as "undiyal" can serve as a channel to move criminal proceeds, including cryptocurrency, overseas outside regulatory oversight. This network exchanges foreign currency into Sri Lankan rupees through local money changers and broker networks without going through banks. Because records are opaque and tracking is difficult, scam groups can easily exploit it to hide or siphon off criminal proceeds overseas. In addition, Chinese communities formed through China's Belt and Road infrastructure projects have served as a cover for Chinese crime groups. Sanjana Hattotuwa, a researcher who has studied Sri Lanka for more than 20 years, told Bloomberg, "It's not unusual to see Chinese residents in apartment complexes and shopping complexes, and sometimes across entire neighborhoods."
By contrast, the legal framework to punish cyber scam organizations is lacking. In the 2025 Corruption Perceptions Index by Transparency International, Sri Lanka ranked 107th among 182 countries and regions. Experts noted that Sri Lanka still does not have a legal system in place to address cyber scam operations. According to investigative outlet OCCRP, the Public Debt Management Office under Sri Lanka's Ministry of Finance had its emails hacked by anonymous hackers and was defrauded of $2.5 million (about 3.8 billion won) in external debt repayments due to Australia. Erin West, a former U.S. prosecutor who founded Operation Shamrock, a support group for cyber fraud victims, told Bloomberg, "In Sri Lanka, crimes are happening in ways that are much harder for us to track," and "whether someone intended it or not, in any environment, a highly skilled fraud workforce is already in place that can be drawn into crime."
The scam industry led by Chinese crime groups has also targeted Chinese nationals as major victims. The Chinese Embassy in Sri Lanka said in a statement on the 7th, "Tens of thousands of Chinese have suffered property losses and physical harm from cross-border gambling," adding, "Since early this year, we have strengthened joint law enforcement with Sri Lanka on online gambling and telecom fraud." The embassy added, "If firm and immediate action does not stop the spread of crime, Sri Lanka's international image, public security, and social stability will be seriously damaged."
The Chinese Embassy also said last month that after crackdowns in Myanmar, Cambodia, and the United Arab Emirates (UAE), illegal activities had shifted to Sri Lanka, adding, "The Chinese government is watching this trend very closely." In an earlier statement, the Chinese Embassy directly pointed to Sri Lanka's advanced communications infrastructure, favorable geographic location, lax visa policy, and friendly locals as factors drawing in Chinese crime groups.
Experts also said the sprouts must be cut before scam groups take root in Sri Lanka. In a contribution last month to Australia's Lowy Institute, Asia Foundation researcher Johan Lebert wrote, "Fraud organizations have consistently demonstrated the ability to fragment themselves across borders and relocate," adding, "While the scale of scam groups in Sri Lanka is still small, we should remember that the conditions that made Cambodia and Myanmar attractive exist in Sri Lanka as well." Julia Dixon, a researcher at the Center for Strategic and International Studies (CSIS) in the United States, told Bloomberg, "Ultimately, the question is whether Sri Lankan officials are willing to take real measures to eradicate scams, or whether, like in Cambodia, they are reaping tangible benefits behind the scenes."