When Thai F-16s struck the border town of O’Smach in December 2025, the official target was a Cambodian “weapons storage facility.” What Thai forces found when they advanced into the rubble was a six-storey building strewn with fake hundred-dollar bills, counterfeit police uniforms, scripts for romance scams, and long lists of victims’ contact details. Behind the casino facade sat one of Southeast Asia’s largest online fraud compounds. The discovery, paraded before reporters and foreign delegates on a military-organised tour weeks later, captured a shift that should worry every government in the region. The industrial-scale scam economy that has metastasised across Cambodia, Myanmar, and Laos is no longer merely a law-enforcement problem or a humanitarian scandal. It has become a driver of interstate conflict and a test of whether the region’s institutions can cope with a security threat that does not fit any of their categories.
This article argues that the scam compounds occupy a dangerous new position in Southeast Asian security: simultaneously a criminal enterprise, a source of state revenue, and a piece of military infrastructure. The Thailand-Cambodia border conflict of 2025 is the clearest demonstration yet of how a transnational criminal industry can entangle itself so deeply with a state that fighting crime and warring with your neighbour becomes the same.
An Industry the Size of a National Economy
The scale is difficult to overstate, which is part of why governments have struggled to respond proportionately. Across Cambodia, Myanmar, and Laos, the cyber-fraud labour force has been estimated to exceed 350,000 people, with conservative figures putting the annual revenue of regional scam syndicates at between US$50 and US$75 billion. In O’Smach alone, an estimated 10,000 people were reported to be working in conditions amounting to slavery, in compounds that one Thai outlet described as the backbone of Cambodia’s economy. These are not fringe operations. They are deeply enmeshed with local elites and, in several documented cases, with the political class itself. The United States has now sanctioned two sitting Cambodian senators, Ly Yong Phat in 2024 and Kok An in 2026, over their alleged links to forced-labour scam empires.
An Amnesty International report based on interviews with more than 400 survivors documented torture, child labour, and slavery across at least 53 Cambodian compounds, describing perimeter walls topped with electric fencing, guarded gates, and “dark rooms” where workers who failed to meet fraud targets were punished with stun batons. The industry runs on trafficked people, recruited through false promises of legitimate jobs and then held against their will. Most of this is directed by Chinese organised crime syndicates, which the US Justice Department now treats as the organising force behind the regional scam economy.
When Compounds Became Military Assets
What turned a criminal problem into a strategic one was the discovery that the compounds had become embedded in the conflict itself. According to the Royal Thai Army, scammer networks did not simply flee when fighting broke out along the disputed border in December 2025. They participated in it, providing financial support to the Cambodian forces and allowing their buildings to be used as military bases, including as drone launch points, sniper positions, and artillery sites. Bangkok’s account, naturally, serves its own narrative, and should be read keeping that in mind. But the physical reality on the ground gave the claim weight: Thai forces captured a string of casino-and-scam complexes during the clashes, among them the O’Smach Resort, which the US Treasury had already sanctioned in 2024 for human-rights abuses tied to forced labour.
A criminal compound that doubles as a firing position is no longer just a site of fraud; it is a legitimate military target, and the distinction between a counter-crime operation and an act of war becomes almost impossible to draw. Cambodia’s information minister has accused Bangkok of using anti-scam operations as a pretext for annexing Cambodian territory. Because Thai forces have refused to withdraw from O’Smach and other captured zones despite repeated demands. O’Smach is reportedly worth around 10 billion baht in criminal investment, which the Thai side assesses that the displaced networks are simply waiting to reclaim.
A Ceasefire Built on a Contradiction
The fragility of the resulting peace flows from this entanglement. The 27 December 2025 ceasefire, brokered under pressure from Donald Trump and Malaysian mediation, committed both sides to cooperate on suppressing transnational crime, including cyber scams and human trafficking. Yet the same compounds that the agreement targets are the territory the two states are fighting over. By April 2026, tensions had flared again around O’Smach when Cambodian soldiers escorted an ASEAN observer team into the contested area, prompting Thailand to move armoured vehicles to the border. A peace deal that depends on joint action against scam centres, while the location of those scam centres is the very thing in dispute, is a peace built on a contradiction.
The competing incentives explain why the problem persists. For Cambodia, the compounds are a revenue source too large and too closely tied to powerful interests to dismantle quickly, however sincere the crackdowns, more than 2,000 arrests, and the extradition of an alleged kingpin to China may be. For Thailand, the compounds offer a morally unimpeachable rationale for military action that also advances its territorial position. And for the Chinese syndicates that run the operations, a contested border zone with weak and divided sovereignty is close to ideal: when one compound is raided, the work simply relocates across a frontier that no single authority fully controls.
Why This is a Regional Security Problem
The temptation is to file all of this under organised crime, a matter for police, financial regulators, and the occasional sanctions package. That framing is now inadequate. The scam economy has demonstrated that it can shape the military behaviour of states, supply combatants in an interstate war, distort the terms of a ceasefire, and provide cover for territorial revision. It has drawn in outside powers as well: the United States has launched a dedicated Scam Center Strike Force, China has chartered flights to repatriate its trafficked nationals, and the reputational damage has cut Cambodia’s regional tourism sharply.
For ASEAN, the episode is against foundational commitments to non-interference and consensus, leaving it structurally ill-equipped to address a threat that is at once internal to its members and entangled with the sovereignty disputes its members least wish to discuss. The Thailand-Cambodia conflict has shown that a criminal industry can turn two ASEAN states against each other and leave the organisation watching from the sidelines. Until governments in the region treat the scam economy as the security threat it has become, rather than a law-enforcement nuisance to be managed, they will keep fighting its symptoms while the industry quietly relocates. The fake hundred-dollar bills scattered across the floor of O’Smach were always going to outlast the ceasefire. The harder question is whether the region’s institutions can adapt before the next compound becomes the next frontline.
Showmik Sarker Prottoy is a student at the Department of International Relations, University of Dhaka. His work focuses on the transnational economic security and the political economy of conflict in South, Central and Southeast Asia.
This article is published under a Creative Commons license and may be republished with attribution.
