Sri Lanka Emerging as a New Base for Asia’s Scam Networks

A crackdown on scam sites in Cambodia is leading some gangs to move into beach resorts and office buildings in Sri Lanka in what could be the next phase of one of the world’s fastest-growing criminal industries.

Investigators say the combination of visa-free travel, available construction space, relatively strong telecommunications networks and a well-established unofficial money transfer system makes the South Asian island nation an attractive target for fraudsters.

Authorities in Sri Lanka have set up a new cybercrime unit and say they have arrested more than 1,000 people this year alone; most of these are in the western coastal areas where tourists flock or in the capital Colombo. “The police are working with immigration and the central bank in a collective effort to see that this is brought under control,” said deputy police inspector Fredrick Wootler.

Still, observers say the country has a short window to welcome fast-moving and increasingly sophisticated operators. “There are problems with the enforcement of our laws in Sri Lanka; the fact that we do not take strict action against these companies; they just use tourist visas,” said Dilrukshi Handunnetti, director of the Sri Lanka Center for Investigative Reporting.

When officers raided a west coast property in April, they found more than 150 foreign nationals allegedly running a cyber fraud operation. Days later, police raided a high-rise apartment building near Colombo and arrested another 120 foreign nationals.

As authorities increase pressure, some operators appear to be shifting from large estates to hotels, apartments and office space that can be rented quickly and abandoned just as quickly.

“This is happening in ways that unfortunately make it even harder for us to keep our eyes open,” said Erin West, founder of the anti-fraud nonprofit Operation Shamrock. “I really think we’re creating workers who are skilled enough to work in any environment, whether they want it or not.”

A report by a US congressional committee in July last year warned that fraud networks were moving into environments marked by “regulatory stress” – jurisdictions with weak enforcement capacity but strong digital infrastructure.

Some of the suspected centers in Sri Lanka may have been staffed by people who fled Southeast Asia’s fraud hotspots and chose to use their newfound skills with limited alternative job opportunities, fraud investigators said.

Sri Lanka’s rise reflects a broader pattern of fraud

Sri Lanka’s rise reflects a broader pattern of fraudulent operations emerging well beyond its traditional strongholds in the United Arab Emirates, East Timor, Fiji and parts of Africa; This raises concerns that transnational gangs are becoming increasingly global.

China is a country that pays attention to this. It was partly Chinese pressure that led Cambodia, a key ally, to impose restrictions earlier this year. The Chinese embassy in Sri Lanka issued a statement in mid-March saying it was “closely monitoring” reports of the arrests of suspected fraudsters, including Chinese nationals.

In the statement, it was stated that “Such cases cause great damage”, citing the country’s developed telecommunications infrastructure, convenient geographical location and the “civility and friendship of the people” for the increase in fraudulent operations.

There is also a long history of Chinese workers living and working in Sri Lanka, partly due to Beijing’s Belt and Road infrastructure projects; This potentially makes it easier for scam operators to get lost in the diaspora.

“It is not uncommon to see entire apartment complexes and shopping complexes and sometimes even neighborhoods with Chinese residents,” said Sanjana Hattotuwa, an independent researcher who has been writing about Sri Lanka for more than two decades.

While Sri Lankan authorities should be looking to other countries, including Vietnam and the Philippines, for how to prevent fraud operators from taking over, they should be looking to Cambodia, where they have clearly done so, according to Julia Dickson, an associate researcher at the Center for Strategic and International Studies.

“The question is: Are the authorities really willing to take action, or are they simply reaping significant benefits, as in Cambodia?” he said. Sri Lanka ranked 107th out of 182 countries and territories in Transparency International’s 2025 Corruption Perceptions Index, just above Algeria, Bosnia and Herzegovina and Laos.

A representative from Sri Lanka’s Ministry of Foreign Affairs, Foreign Employment and Tourism did not immediately respond to a request for comment

Sri Lanka currently offers visa-free entry to about half a dozen countries, including China, and has approved plans to increase this number to 40 to boost tourism. Visitor arrivals increased again in May after slowing in March and April, possibly due to protracted conflicts in the Middle East.

It is too early to know whether human smuggling is taking place through fraudulent operations in Sri Lanka, according to Stephanie Baroud, a criminal intelligence analyst at Interpol’s human smuggling and migrant smuggling unit in Lyon. “This is not something that has been acknowledged or reported yet,” he said. But he added that lax visa policies could be a factor facilitating human trafficking.

While Sri Lanka lacks a legal framework equipped to combat cyber fraud operations, easy access to SIM cards and widespread connectivity make it an attractive base for fraud networks, according to Hattotuwa. The country’s unofficial Undiyal money transfer system could also provide a gray market channel for the proceeds of fraud, including cryptocurrency, to move beyond the reach of regulators.

According to Central Bank Governor Nandalal Weerasinghe, Sri Lanka’s Financial Intelligence Unit is working with local law enforcement in combating illicit flows of funds. He declined to comment on whether Sri Lanka was working with foreign officials.

One urgent imperative is to better share information about what is happening in Sri Lanka. Cuts in U.S. foreign aid have weakened civil society groups that often provide early warnings about emerging fraud centers.

“We have much less information about what’s happening on the ground,” CSIS’s Dickson said, making information sharing even more critical in tracking fraud networks.