The true cost of cross-border crime

SCAM syndicates, human trafficking networks and cross-border smuggling operations have become one of the defining security and economic challenges of this decade, and the price tag is no longer abstract.

The State of Scams in Malaysia Report revealed losses of RM54.02bil in a single year, equivalent to roughly three percent of the entire national GDP.

That figure alone should reframe how this issue is discussed. Three percent of GDP is not a rounding error or a policing footnote; it is comparable to entire sectors of the economy.

And the RM54bil figure almost certainly understates the true scale since the same report found that 70% of scam victims never file a police report at all, deterred by shame, scepticism that anything will be recovered or simple unfamiliarity with the process.

A national security threat that most victims do not even report is, by definition, one that is being significantly underestimated in the public conversation.

What makes this threat a genuinely cross-border security issue rather than simple domestic fraud is its infrastructure. The United Nations Office on Drugs and Crime (UNODC) has documented how scam operations across South-East Asia have industrialised, often run out of compounds where trafficked workers are coerced to prey on victims worldwide.

The UNODC executive director has described these networks as flexible, persistent and adaptable, capable of relocating across a border the moment one jurisdiction cracks down on them.

Cambodia’s attempt to eradicate its scam industry by a set deadline earlier this year illustrated the problem precisely: raids succeeded in some locations while entire operations simply packed up and moved elsewhere in the region.

Financial Action Task Force assessors have identified Malaysia’s strategic location as a transit hub, exposed to smuggling of drugs, wildlife, weapons and migrants alongside human trafficking and organised crime.

This vulnerability is compounded by the rapid growth of digital financial services that provide scam syndicates new channels to exploit.

The emerging smuggling corridor across the Sulu and Celebes Seas, connecting Indonesia, Malaysia and the Philippines, is a reminder that this is not solely a digital-age problem; physical trafficking infrastructure runs in parallel with the online scam economy, often serving the same networks.

The economic consequences extend well beyond the direct losses to victims. Cross-border criminal financial flows complicate Malaysia’s own anti-money laundering obligations, with international assessors specifically flagging trade-based money laundering and cross-border crime as areas where our institutional understanding still needs major improvement.

Every ringgit that moves through these networks undetected also represents lost tax revenue, distorted informal economic activity and reputational risk for a country trying to position itself as a trustworthy hub for legitimate regional trade and investment.

As Asean Chair in 2025, Malaysia rightly prioritised curbing these scam syndicates as a regional issue rather than a purely domestic one, correctly recognising that no single country can dismantle a network built to relocate the moment it is under scrutiny.

But curbing these syndicates requires commitment, including deeper cross-border law enforcement cooperation, harmonised legal frameworks across Asean member states, and technology-sharing that lets one country’s intelligence about a syndicate reach its neighbours before that syndicate simply moves next door.

Malaysia’s economic ambitions, from Visit Malaysia 2026’s tourism targets to its positioning as a regional investment and logistics hub, depend on the same cross-border openness that these criminal networks exploit.

This is not an argument for closing borders; it is an argument for recognising that economic openness and security investment must be built together, not sequentially.

A country cannot fully capture the economic upside of regional connectivity while treating the criminal networks exploiting that same connectivity as someone else’s problem to solve.

NEVHAN PHRASSANTHA NAIDU PUSPAKARAN

Changloon, Kedah