A senior U.S. official accused China’s government on Wednesday of implicitly backing Chinese criminal syndicates running cyber scam compounds across Southeast Asia and of exploiting a crisis that has resulted in billions being stolen from Americans each year.

Speaking during a Joint Economic Committee congressional hearing about U.S. efforts to combat digital scams that cost U.S. citizens more than $16 billion each year, Reva Price, commissioner with the U.S.-China Economic and Security Review Commission, placed the blame squarely on the People's Republic of China. 

She argued that Beijing has quietly supported several leading scam compound leaders, commingled government funds with scam proceeds and used concern about the scam centers to deepen its law enforcement influence within Cambodia, Laos, Myanmar and Thailand. 

China has been lauded in recent years for taking a tough stance on scam compound bosses. The country’s government recently sentenced two families to death for their role in running notoriously brutal cyber scam compounds in Myanmar, and earlier this year, Chinese law enforcement extradited reputed cyber scam kingpin Chen Zhi. 

But Price said she and other members of the congressionally-backed commission traveled to Cambodia to investigate the scam centers last May and found alarming links between the profits accrued from the scam centers and the Chinese government’s Belt and Road Initiative. 

Chinese criminal syndicates have “invested in projects linked to China's Belt and Road Initiative alongside China's state owned enterprises,” she said, adding that they “have also seen criminal leaders who appear to have gotten a pass by promoting messaging and other activities aligned with Chinese Communist Party priorities.”

In written remarks provided to the committee ahead of her testimony, Price specifically cited Yatai New City — a development project in Myanmar’s Shwe Kokko that was heavily embraced and touted by Chinese government officials. Multiple state-owned companies in China signed contracts to build it, and within a few years it became “the largest hub for Chinese online scam syndicates in Southeast Asia,” Price said. 

In addition to the commingling of finances, Price claimed there is other evidence showing some cyber scam bosses got a pass from Chinese law enforcement if they touted PRC propaganda. 

She cited the case of crime boss Wan Kuok-Koi, also known as “Broken-Tooth,” who spent 14 years in prison for his role as head of the 14k triad gang but after his release immediately began rebuilding his criminal operations in Southeast Asia.

“But this time, he re-branded himself as a patriotic pro-CCP businessman. He famously stated, ‘I used to fight for the cartels, and now I fight for the CCP.’ Remarkably, he received an award from a CCP-affiliated entity for the propaganda work of one of his organizations,” Price said. 

“Broken Tooth has been sanctioned under the Global Magnitsky Act since 2020, but to date China has not taken any action to crack down on his scam centers. This suggests Beijing is willing to tolerate Chinese criminal groups that use the profits from scam centers to help support its agenda.”

China initially stepped in to crack down on the scam centers because it grew tired of them targeting Chinese citizens. But Price said an analysis of the arrests showed China was selectively taking down the scam operations that impacted their citizens while allowing the ones victimizing foreigners to continue. 

Chinese scam syndicates “have been incentivized to shift targeting Americans,” she said.

“To illustrate this point, in 2024, losses from online scams in China declined by about 30% while losses in the United States increased by roughly 40%. Americans are now among the top targets of China-linked scam centers,” Price explained.

One alarming development the commission found was the allowance of small-scale scam operations within China itself. Chinese criminals arrested during earlier crackdowns are now being let out of prison and are setting up shop in China, Price claimed. 

“They think they won’t be targeted if they engage in ‘Foreign Butchering.’ Under the meme, ‘Chinese don’t scam Chinese’ they only target foreigners. While China has clarified that this activity is also illegal, in practice the perpetrators of foreign butchering scams within China rarely face consequences,” she explained.

The commission’s trip to Cambodia was also alarming due to the scale of expansion of cyber scam compounds. She noted some estimates that the operations in Myanmar, Cambodia and Laos generated about $44 billion, which amounts to 40% of those countries’ combined GDP. 

According to Price, China has used the international concern about the crisis to tighten its grip on the governments of all three countries and embed its law enforcement apparatus locally. 

Beijing has “pressured countries to agree to a greater role for Chinese security forces, and has had success in Laos, Cambodia and even U.S. ally Thailand,” she said, citing security agreements signed with Laos and Cambodia in 2023 and 2024 as well as a regional pact signed with Myanmar, Thailand and Vietnam to “strengthen intelligence sharing and joint operations to crack down on scam centers.”

Last year, Chinese officials convinced Thailand to allow Chinese law enforcement agents to participate in scam center raids after the country had resisted the practice for several years. 

“China is trying to use the same playbook as scam centers have spread globally — including in Palau and most recently parts of Africa,” Price said. “Chinese security forces have also confiscated electronic devices with Americans personal data from raids on scam compounds.” 

At the hearing on Wednesday, FBI deputy assistant director Gregory Heeb said one of the biggest barriers for American law enforcement targeting the scam centers is that they are guests in another country and their effectiveness is dependent on the cooperation of the other government. The FBI has had success in India and Thailand due to the local willingness to help take down the scam centers. 

But in other countries they have had issues getting to the “higher levels of those operations,” he said. 

Heeb noted that a senior FBI official traveled to China in November to meet with the vice minister of security and “open the lines of communication.” He warned that engagement with the Chinese government on scam centers is in the very beginning stages but said the FBI realized it needs to make “connections there to address the scam centers.”

Senator Maggie Hassan (D-N.H.) said Congress has seen some progress in its engagements with the Chinese government over the issue of fentanyl precursors and she argued the same needs to be done on the issue of cyber scam centers. 

Hassan told Recorded Future News that a key part of the Trump administration’s effort to stop scams “must include increased pressure on China to stop turning a blind eye to criminals who operate, fund, and enable scam compounds that target Americans and people across the globe." 

Disrupting the increasingly global scam center operations should become a key pillar of U.S diplomatic engagements, several witnesses said.

“The U.S. government should treat the scam crisis, alongside the fentanyl epidemic, as a priority issue in bilateral negotiations with Beijing and the governments of countries where scam centers operate,” Price added. 

Potential solutions

Hassan and several other members of Congress on the committee spoke at length about constituents who came to them after suffering from devastating scam losses. 

Victims described the shame associated with being scammed and the further trauma of having nowhere to turn. Hassan has introduced a bill that would centralize scam reporting, and explained during the hearing that many of her constituents have complained about not knowing whether to report scams to the FBI, local law enforcement, the Federal Trade Commission or other agencies. 

Some who have reported scams never heard back from officials and were left helpless in the wake of their losses. 

In addition to a centralized reporting portal, witnesses urged the government to hold technology companies accountable, citing a recent report from Reuters that said Meta projected about 10% of its 2024 revenue, roughly $16 billion, would come from ads linked to scams and banned goods. 

Others called for awareness campaigns, better information sharing mechanisms between federal and state law enforcement, regulations on AI that would stop scam calls before they even make it to phones, and requiring cryptocurrency companies to slow down transactions so funds could be clawed back.

In light of the $15 billion in bitcoin seized from a Cambodian conglomerate linked to scam centers, the U.S. should create a reward program for cryptocurrency tracing firms that identify, report and seize stolen funds, one Justice Department official suggested. 

Several witnesses noted the success of recent rules that have limited domestic caller ID spoofing. Those rules need to be applied to international calls, text messages, and the social media outreach that scam centers predominantly use to target Americans, they said.

The panel included the DOJ’s Karen Seifert, who runs the newly created Scam Center Strike Force. Seifert said the effort has grown to have more than 150 personnel across the country, including prosecutors and law enforcement agents. 

Seifert said the Strike Force would be more effective if they could immediately take down websites or platforms involved in scamming rather than having to prove in court that they are involved in money laundering — a painstaking process that is made more difficult by the opacity of cryptocurrency and the sophisticated laundering efforts of Chinese criminal syndicates. 

“If all I had to prove was that it was a mechanism of fraud, we could take that website down with a seizure much more quickly,” she said. 

She added that it would help the Justice Department if Congress passed laws making it so victims of scams could be compensated. Right now, the victim fund outlined in a recent executive order forces the DOJ to trace every penny back to specific victims, and Seifert said in most cases they can only link between 20% or 30% of what they seize to specific victims.