Southeast Asia can play a major role in a global anti-scam alliance

by Institute

Between August 2022 and August 2023 scammers stole an estimated US$1.02 trillion globally.^[1] This was one of the headline figures at last week’s Global Fraud Summit, hosted by the UK government in London last week from 11-12 March 2024.

Southeast Asia plays an unfortunate but significant role in the global scam industry. Several countries in the region host criminal operations targeting victims both in the region and beyond. While citizens of Southeast Asian economies are increasingly defrauded as the victims of scams, many are also the victims of human trafficking operations recruiting people in boiler room operations often located in areas beyond the reach of law enforcement.

The online nature of many of the scams, as well as the movement of illicit gains means this is a truly transnational challenge, in need of global cooperation and solutions.

In response, governments across the world are coming together to develop cross-border solutions and partnerships to tackle the issue. On 11 March 2024, ministers, major financial institutions, and leading tech firms with a global reach including Apple, Meta and TikTok convened in London for the inaugural Global Fraud Summit.^[2] The summit saw the attending governments endorse a communique including commitments to improve the recovery of funds across jurisdictions, strengthen coordination between law enforcement agencies, galvanize industry partners to work with governments, and facilitate proactive cross-border information sharing.^[3]

There was heavy representation at the Summit from developed economies; members of the G7 and Five Eyes. However, representation from the Asia-Pacific region was limited to Japan, Singapore, and South Korea. Furthermore, almost all of the participating countries were high-income countries, with limited representation from markets such as those in Southeast Asia that often serve as unwilling hosts to scam operations with global reach.

While the inaugural global summit is a positive first step – building on other international efforts such as the UN cybercrime treaty – it is essential that subsequent steps fully involve countries such as those in Southeast Asia who are at the frontier of fighting scam operations.

Notwithstanding the importance of local views, there is a significant number of legislative and regulatory initiatives underway in the region, as well as the untapped potential for better coordination between governments and law enforcement in market and internationally.

With the global summit as context, the Southeast Asia Public Policy Institute has published a Policy State of Play looking at the state of fraud and scams in Southeast Asia with a focus on policies and initiatives to stop online fraud. You can also find below a short summary of the briefing.

Executive Summary: Policy State of Play – Online fraud in Southeast Asia

Over the last decade, Southeast Asia has earned a reputation for being a hub of online fraud and scam operations. According to a report by the UN Office on Drugs and Crimes (UNODC), profits from the scam industry in just one Mekong nation in 2021 was estimated to be between US$7.5 and US$12.5 billion.^[4]

Recognizing the significance of the issue, ASEAN leaders pledged to crackdown on online fraud operations – with a focus on those run by human traffickers – during the 42^nd ASEAN Summit in May 2023.^[5] ASEAN has established a number of mechanisms to facilitate high-level discussions, enhance information and knowledge exchange, build capacity for law enforcement officials, and promote cooperation with external partners. ASEAN is also cooperating with other organizations such as INTERPOL and the UNODC to tackle cybercrime.

Across the region, the growth of online scam and fraud cases has made it a major political issue, driving governments to act urgently and introduce new safeguards for citizens. From a legislative standpoint, most countries in Southeast Asia have already passed, or are moving towards introducing new legislation to combat scams. The following provides a brief overview of regulatory and policy developments in the different Southeast Asian countries.

Singapore – the government is highly active, working with industry players including financial institutions and e-commerce through initiatives such as the Anti-Scam Command (ASCom). The government is looking at a Shared Responsibility Framework (SRF) that may introduce obligations on financial institutions and telcos to share the liability of scams.
Malaysia – the government is developing its approach which will include new legislation to safeguard digital security, imposing penalties on financial institutions if they fail to implement appropriate measures to mitigate scams.
Thailand – new measures will place significant focus on providing consumers with ability to report and freeze their bank accounts and transactions if they suspect they have been a victim of fraud.
Vietnam –the government is focusing on introducing legislation to strengthen data security to prevent consumer data from being accessed and exploited by scammers, as well as moving to phase-out 2G networks which more vulnerable to exploitation.
Philippines – to address regulatory gaps hindering the response to emergent threats, the government will pass new legislation criminalizing acts such as being a money mule or committing social engineering schemes. The bill may also impose more obligations on financial institutions to protect their customers.
Indonesia – the government is introducing a new platform that enables the public to report numbers that are suspected to be used for scams to be blocked. The government is also actively trying to block online trading and investment platforms that fail to comply with current laws and have been found to be fraudulent.
Cambodia – the government has come under significant international pressure to deal with scam operators within its territory including from Thailand and China, though issues persist with scammers simply moving elsewhere in Cambodia or to neighbouring Laos or Myanmar.
Laos – the government is cooperating with international and Chinese law enforcement as well as looking into establishing greater government oversight of special economic zones which play a significant role in hosting scam operations.
Myanmar – The current ongoing civil conflict and the breakdown of the rule of law in many areas in Myanmar poses a significant obstacle to meaningful regional action against scam operations. The military government has come under increased pressure from China to act against the scam rings which have been targeting Chinese citizens.

Online fraud and scams are yet another area where the diversity of Southeast Asia’s economies creates a wide range of challenges. High income markets, such as Singapore, are primarily targets for scammers, while areas with security challenges and limited enforcement capacity host scam operations, with a different set of victims implicated.

However, the issue is front of mind for governments in the region, given its direct impact on citizens, links to organized crime, and international attention. Hence, it has become an area of significant legislative activity for almost every government in the region. It is imperative that legislative developments create an effective landscape for addressing online fraud, and that Southeast Asia has a seat at the table for global discussions aimed at cooperation to combat the global scam industry.

About the Southeast Asia Public Policy Institute

The Southeast Asia Public Policy Institute is a research institute based in Bangkok and Singapore, working across the region. Our mission is to support the development of solutions to the most pressing public policy challenges facing Southeast Asia in the 21st century. The Institute undertakes in-depth research to develop actionable policy solutions on a range of issues across sustainability, technology, public health, trade, and governance. We convene dialogues with stakeholders and decisionmakers to drive discussion on the challenges and opportunities facing markets across the region. The Institute draws on a network of in-market researchers, advisors, and partners to provide insights and recommendations for governments, policymakers, and businesses.

[1] https://www.straitstimes.com/world/14-trillion-lost-to-scams-globally-s-pore-victims-lost-the-most-on-average-study#.

[2] https://www.gov.uk/government/news/uk-hosts-world-leaders-for-first-global-fraud-summit.

[3] https://www.gov.uk/government/publications/communique-from-the-global-fraud-summit/global-fraud-summit-communique-11-march-2024.

[4] https://www.unodc.org/roseap/uploads/documents/Publications/2023/TiP_for_FC_Policy_Report.pdf, p.2; 20.

[5] https://asean2023.id/storage/news/ASEAN%20Leaders%20Declaration%20on%20Combating%20TIP%20Caused%20by%20Abuse%20of%20Technology.pdf.