The explosion of transnational scam centers in Cambodia has drawn global attention for its brutality, including forced labor, torture, digital fraud, and widespread human trafficking. Yet beneath these abuses lies a quieter but equally consequential story: the structural governance failures that allowed these criminal ecosystems to take root. This article reframes Cambodia’s scam-center crisis through the lens of financial regulation, investment governance, and state capacity, arguing that the country’s development strategy, built on openness to foreign capital, has outpaced its ability to manage complex financial risks.

Cambodia has become an unlikely node in the global fraud economy. Scam compounds hidden in casinos, tower blocks, and special economic zones now draw in trafficked workers and defraud victims worldwide. Amnesty International estimates that at least 53 scamming compounds have operated across the country since 2022, with abuses ranging from forced labor and torture to slavery-like confinement.

The cruelty is well documented. Less discussed is the regulatory plumbing that made this business model viable. Cambodia’s problem is not only criminal gangs; it is a development strategy that welcomed capital faster than it built the institutions to police it.

The built environment of fraud

By 2019, official figures on the number of casinos in Preah Sihanouk were inconsistent but uniformly high. Local police acknowledged 62 legal casinos operating in the province, while the Ministry of Economy and Finance cited 88 casinos in Sihanoukville city alone, with additional projects still under construction.

When Phnom Penh banned online gambling in early 2020, the buildings did not disappear; they were repurposed. U.S. sanctions in 2025 described Sihanoukville’s “casinos-turned-criminal compounds” housing virtual-currency investment scams and forced-labor operations. The physical and legal infrastructure, including land concessions, casino licenses, and SEZ permits, had already been granted under the banner of development.

The macroeconomic story reinforced this logic. Cambodia’s GDP in 2024 was about US$46 billion, up from roughly US$42 billion in 2023, with growth above 5%. Net foreign direct investment inflows reached nearly US$4 billion in 2023, around 9 to 10 percent of GDP, one of the highest ratios in the region. For a lower-middle-income country, turning away money was politically difficult. Screening who was behind it was often an afterthought.

Investment openness, limited gatekeeping

The 2021 Law on Investment locks in a strikingly open regime that includes generous tax holidays, equal treatment of foreign and domestic investors, and strong protections against expropriation. On its own, this is not unusual. The difference lies in what is missing.

First, investor screening is thin. Unlike some neighbors, Cambodia has no mature mechanism for assessing national-security or financial-integrity risks for large projects in casinos, SEZs, or luxury real estate. Since 2021, the U.S. State Department has warned that casino-heavy investments in Sihanoukville carry a “high risk” of money laundering and cybercrime.

Second, beneficial-ownership transparency remains weak. Corporate registries seldom verify who actually controls companies. Amnesty International’s 2025 report notes that many compounds are owned through layered entities, sometimes involving offshore structures, which complicates prosecutions and sanctions enforcement.

Third, SEZ governance is fragmented. Zones are often managed through public-private partnerships with limited central oversight. They enjoy tax and customs privileges and streamlined approvals. These features are attractive to manufacturers but also to operators seeking to hide labor abuses and illicit funds behind the label of “export-oriented” investment.

None of this means the Cambodian state set out to build a scam economy. It does suggest that a model premised on “any capital is good capital” will, in the absence of strong institutions, attract the worst kinds.

Digital inclusion, analogue regulation

Scam centers also rely on a financial infrastructure that has modernized rapidly. Over the past decade, Cambodia has moved from a largely cash economy to one where mobile wallets and QR payments are widespread. By 2024, digital financial services are expected to reach a majority of adults, according to the World Bank. International agencies have praised this shift as progress on financial inclusion. Yet as UN reports on “trafficking for forced criminality” in online scamming note, these systems, when lightly regulated, are ideal for moving large volumes of small, poorly documented payments.

Three weaknesses stand out:

• Anti-money-laundering and counter-terrorism-financing enforcement for non-bank actors remains uneven. High-volume transfers through mobile-money agents and informal channels are difficult to monitor.

• Virtual-asset regulation is rudimentary. Scam networks in Cambodia and neighboring countries rely heavily on cryptocurrency and over-the-counter brokers to move proceeds. Regulators have struggled to keep pace. UNODC estimates regional losses from such scams in the tens of billions of dollars each year.

• Institutional fragmentation persists. The National Bank, Interior Ministry, Commerce Ministry, and SEZ authorities each oversee different aspects of the system. Criminals exploit the gaps between them.

Recent moves show that Phnom Penh is not entirely idle. Large police operations in 2025 led to more than 1,000 arrests linked to cybercrime in just three days, according to the Associated Press. But raids are episodic; the underlying risk architecture remains.

Cleaning up scam centers will be politically uncomfortable. Some of the country’s most prominent business empires, along with parts of the local elite, have benefited from the casino and real-estate boom that created today’s shadow economy. Yet the alternative is a country branded as a hub for fraud and trafficking, with reputational damage that will outlast any short-term inflows.

Cambodia is not unique. Myanmar and Laos face similar challenges. But its trajectory is distinctive: a country that has rebuilt from war and genocide, integrated into global supply chains, and now finds part of its economy hijacked by criminal entrepreneurs who exploit the very openness donors once celebrated.

Whether Phnom Penh can reassert control over this shadow economy will determine not only how many scam compounds are shut down, but what kind of growth model Cambodia pursues in the next decade.

Edited by: Krithiga Narayanan