Hearing

well good morning select committee will come to order and i wanna thank everyone uh for coming today i know uh the house schedule has changed and uh so we don't have session today But uh, representative Kana and I felt that this topic is so important that we wanna continue and have this hearing today. And uh, really appreciate our witnesses being with us today. I know some of you cancelled family vacations, came in from Thailand, all over uh, and uh, we are very grateful. But uh, you know our nation confronts one of the fastest growing and largest financial threats facing Americans. the industrial scale scam and fraud ecosystem fueled by China and enabled by corruption, weak governance and illicit finance in Southeast Asia. In twenty twenty four, Americans lost at least ten billion dollars to these scams. That's ten billion with a B. These victims are our families, neighbors and friends, and they are being ripped off by sophisticated criminal networks linked to China. These criminal organizations are perpetrating these scams with the scale, discipline and adaptability of multinational corporations. This morning, the select committee released an investigative report that details how these are not isolated criminal enterprises. They are part of a distributed ecosystem of fraud, human trafficking, cybercrime and illicit finance that has evolved into a national security challenge for the United States. Our investigation found that while China does not centrally direct scam compounds, the Chinese government's deliberate failure to combat this threat has enabled their growth and global reach, increasing harm to Americans. For the first time, this report includes new findings exposing how a Chinese government-owned company directly contracted with a criminal organization to construct massive scam center compounds in Southeast Asia. Make no mistake, the Chinese government has the ability to act, to bring these scam center operators to justice, but it chooses not to. China's internal crackdowns on online gambling and domestic scam centers have pushed Chinese criminal operators out of the country and Cambodia and Burma, where weak governance, corruption and political protection in those countries allows these scam centers to expand. At the same time, China remains essential to sustaining scam centers in the broader region. Chinese language financial systems, cryptocurrency and money laundering networks provided the infrastructure necessary for scam proceeds to move rapidly across borders, while evading scrutiny. Our investigation also highlights another horrifying dimension of this ecosystem, forced criminality and human trafficking. Scam compounds across Cambodia, Burma and other regional hubs rely heavily on human trafficking. Thousands of victims from across Asia, Africa, Europe and Latin America have been lured by false job advertisements, stripped of passports, threatened, beaten, and ordered to scam victims online. Our investigation does not just highlight harms to American families, it also discusses the direct implications for U. S. national security. These China-linked scam networks weaken U. S. partners by corrupting political systems, distorting economies, and eroding the rule of law. In countries where scam centers become entrenched, Chinese criminal act criminal actors gain leverage over infrastructure, political elites, and local institutions. This weakens the ability of regional governments to cooperate effectively with the United States on strategic priorities meant to defeat the CCP's authoritarian ambitions in the region. The Trump administration has taken decisive action to confront these scam centers by standing up the scam center strike force led by US Attorney janine pirro in just the last few months the strike force announced criminal cases against two chinese nationals who managed a cryptocurrency investment fraud compound in birma and seized more than seven hundred million in cryptocurrency but isolated arrests and sanctions alone will not solve this problem congress must respond with urgency first we must pass Dismantle Foreign Scam Syndicates Act. This bipartisan legislation, led by Representative Jefferson Schrieve, passed the House Foreign Affairs Committee last September. As a lead cosponsor, I encourage all of our committee members to join the growing list of more than sixty Republicans and Democrats supporting this bill. Second, we should prioritize China-linked scam centers as a cross-cutting national security problem. This threat overlaps cybercrime, corruption, human trafficking, illicit finance, and America's strategic interests. It simply cannot be reduced to a single category. The Chinese-linked scam economy is stealing billions from Americans, trafficking vulnerable people into forced criminality, corrupting strategic regions, and undermining American security and prosperity. We must act now. And I'd now like to recognize the ranking member, Ro Khanna, for his opening statement. Ro.

Thank you, Mister Chairman, and thank you for your leadership on this issue, and thank you to our witnesses uh for coming uh from far for and participating today. Today, the select committee is releasing a bipartisan investigatory report on the China-linked scam networks that steal at least ten billion dollars each year. from American victims like some of them who are here with us today. I'm sorry for the pain you've been put through and appreciate you being here. Many of these scam networks operate from compounds in Southeast Asia that are controlled by organized criminal groups with links to China. Most of these, uh, are mysterious messages and phone calls, a text pops up on our phone that says, " How are you doing?" from an unknown number. All too often, the person on the other end text is a human trafficking victim locked in a scam compound with instructions to steal as much money from victims as possible americans are emptying their bank accounts to line the pockets of crime bosses and the chinese government frankly could be doing more to prevent these harms and hold those responsible accountable take the example of shun juer after moving from china to cambodia he founded the prince group which for many years operated one of the largest scam networks in the world Through corruption he operated with complete impunity, even becoming a cabinet-level advisor to Cambodia's prime minister. Meanwhile, he operated a massive human trafficking network to lure workers to his scam compounds, where they were forced under threat of torture to trick Americans into sending him crypto. The Chinese government say they condemn Shunzhuo, who also scammed Chinese victims, and just this January they indicted him and extradited him back to China. But China only acted after its crimes were exposed to the world by Radio Free Asia journalists, which also led to sanctions and indictments here in America. And for the very first time, our investigation reveals that the Prince Group's headquarters in Cambodia was actually constructed by a Chinese state-owned enterprise. I want to be clear. While there are Chinese times, Thais, the scam is not a vast conspiracy by the Chinese government. As our investigation explicitly states, quote, the scam industry, is not directed by Beijing and Congress should support tactical law enforcement cooperation with China. We can't solve this crisis without their cooperation. But clearly China is not doing everything they could to hold their citizens accountable. Selective enforcement isn't enough, and it shouldn't take American investigative journalism to get a guy like Shun-Jor arrested. The point is, only more important at a time when federally funded organizations like Radio Free Asia are uh being defunded. Last year, due to budget cuts, it even had to halt operations. Well, it's more the two US government agencies that first wrote reports on the China linked scam compounds USAID and US Institute for Peace have entirely been eliminated by Doge and it so happens three of the authors of that USIP report on scam centers are the committee's witnesses today, Mister Sim, Mister Tower and Miss West. Thank you for your work. Here's the truth. If we wanna hold China's feet to the fire so they can't turn a blind eye to the suffering of scam victims in America and elsewhere, we need to be funding organizations like Radio Free America, USAID, USIP, and the NAD NED that have proven track records for exposing scammers. But once civil society has exposed these scammers, we need to hold them accountable. In twenty twenty four, President Biden imposed the first ever sanctions against a Cambodian scam compound operator when he targeted the young pet. In the past year, more sanctions have followed. Here in Congress, a bipartisan group of members has established a stop scams caucus, going after criminals who victimize Americans is a responsibility that you should unite each and every one of us. Powerful elites linked to China are scamming working class Americans and using forced labor to do it. It is unacceptable and it must stop. Thank you, Mister Chairman, for your bipartisan leadership on this issue.

Thank you. Uh, appreciate it, ranking member, and if any other member wishes to submit a statement for the record, without objection, those statements will be added to the record. I'll now introduce our three witnesses. Uh, Miss Erin West specializes in transnational organized crime, with a focus on the criminal investigation and prosecution of crypto cons cryptocurrency related cases. Erend is the co- is the founder of Operation Shamrock, a global nonprofit uniting law enforcement, industry, citizens, and victims to disrupt the world's fastest growing form of transnational organized crime digital scams. Mister Jacob Sims is an independent analyst and advisor focused on transnational crime, authoritarian political economy, and related security challenges. Across research, advisory, and policy work, he helps federal agencies, think tanks, and private sector partners understand and respond to criminal political ecosystems. He is a visiting fellow at Harvard University's Asia Center. Mister Sims also assisted this committee as a bipartisan consultant on this topic, given his expertise. Mister Jason Tower is a senior expert at the Global Initiative Against Transnational Organized Crime, where he works on organized crime, security and illicit economies in Southeast Asia, with a particular focus on Myanmar and China. Since twenty nineteen, Jason has worked on the rise of criminal enterprises hosting industrial scale scam operations across the region. And with that, I want to welcome all of our witnesses. And thank them for being here this morning. And Miss West, uh, you are now recognized for your opening remarks.

Thank you so much. Thank you, Chairman Moulinar, Ranking Member Khanna, distinguished members, thank you for the opportunity to testify. I want to tell you about Chris. Chris is a divorced father from Massachusetts. He served the he served his country as an army officer. He raised three sons. Two years ago, he became a grandfather. He was four years from retirement. A woman contacted him on Facebook. Beautiful, German accent, sophisticated. Chris was skeptical, and he asked for a video call. She agreed. She looked exactly like her photos. Over the next several months, she convinced him to invest in what appeared to be a legitimate trading platform. It was fake. By the time Chris realized the truth, Ninety percent of his retirement had been stolen. He called local police. They said they did not have the resources to help. He filed an FBI report. He never heard back. The Secret Service told him the loss was too small to prioritize. The fake profile used to scam him is still active today on Instagram. He has reported it repeatedly. Meta has responded that it does not violate community standards. Chris is not an outlier. He is the everyman American victim of this crime. And his story exposes the structural failures in our response. Local police without the tools, federal agencies without the capacity, technology platforms without the will. I'm also here on behalf of Don, a retired engineer from Florida. Scammers stole more than half a million dollars from him. And when law enforcement would not help, Don traveled to Singapore and Laos at his own expense. He hired a Chinese law firm. He identified a Chinese kingpin operating scam compounds across Burma and Laos. Don, a private American citizen with no badge, conducted the investigation our system was not yet built to do. I'm here on behalf of Mary, a Wisconsin paralegal who fed cash into a Bitcoin ATM twenty-four times in a local gas station. When law enforcement would not help, Mary built the case herself. She identified four Nigerian suspects and provided forensic evidence to law enforcement on two continents. Mary asked me a question I hope this committee remembers. Why in the United States in twenty twenty-six are victims having to solve their own crimes? This is not a collection of isolated fraud cases, it is an industrialized global criminal economy. I call it the scamdemic. Over the last three years, I have traveled repeatedly to Cambodia, Thailand, the Myanmar border, and the Philippines to investigate these compounds myself. I have stood outside scam compounds in Phnom Penh and been surrounded by men telling me to delete my video, one wearing a Cambodian police uniform. This is state protection in real time. In February, outside Phnom Penh, I found four new scam compounds lit up like an NFL stadium. So new they aren't even on Google Maps. The crackdown is largely a sleight of hand. The industry is not disappearing; it is moving. I have met trafficking victims forced to perpetrate scams under torture and threats of death. The American grandfather whose retirement is stolen and the trafficked worker beaten inside a scam compound are victims of the same criminal enterprise. sometimes through the same keystroke. And this is no longer a consumer protection issue. Thirty-eight miles from a Chinese-built runway on Cambodia's coast sits Ream naval base, where Chinese warships now dock permanently. The same patronage networks protecting scam compounds enabled that expansion. American household wealth is being extracted at industrial scale and is flowing through criminal ecosystems, tied to hostile state influence and regional instability. This is not simply fraud, this is national security. For four years, I have been warning that this was already here. And for four years, the response has lagged behind the threat. We are not at the beginning of this crisis, we are four years since I've been talking, six years behind the start of this. Americans are losing their retirements, their homes, and in some cases their lives. Victims cannot continue to investigate these cases alone. Local law enforcement cannot confront transnational organized crime without federal support. And voluntary action from technology platforms is plainly failed. Congress has the ability to change that. Fund the response. Pass the legislation. Treat this like the national security issue it has become. We cannot afford to be four more years behind.

Thank you very much. Mister Sims, you may now proceed.

Chairman Molnar, Ranking Member Khanna, and distinguished members of the select committee, thank you for the opportunity to testify today. Like Aaron, but from a very different vantage, I've observed the scam compound phenomenon since well before it came to public light. And watching the world gradually and then suddenly awaken to the crisis has been quite encouraging. But much of that attention has been and remains focused on the compounds themselves. And that's understandable. What Aaron has described here is nothing short of brutal. These compounds are destroying the lives of scam victims from America and all over the world and they are trapping trafficking victims in horrific cycles of forced criminality. But the scam compound is only the visible front-end. The deeper threat is the political architecture that protects it. And that's why I'm particularly encouraged by the committee report, framing that rightly resists the simplistic explanation here. This isn't a single command and control style conspiracy run by Beijing, but it's also not ordinary organized crime. Rather, you describe a highly complex system, a regional and global network with many nodes. And my work forky focuses on one part of that system that remains severely under-examined today. And that is what happens when transnational criminal networks not only enter a host country but become embedded intractably in the political economic fabric of that country. Cambodia is the most mature case of that phenomenon today. And Cambodia cannot be understood merely as a cybercrime hub, a trafficking destination, or a problematic And it is certainly all of those things, but more precisely, Cambodia is an advanced case of what criminal authoritarianism looks like in the digital era. This is a system in which illicit markets have become bound up with the incentives, the survival strategies, and the external alignments of the political order that exists there. And in my written testimony I describe this as scam state architecture, and it has three basic layers. The first, at the top, are the external, capital, and capacity actors. These are the foreign criminals, the grey market actors that are predominantly from the People's Republic of China who bring the money and the operating model. Second is the territorial protection layer. These are the compound owners that Aaron described, the local oligarchs who are bringing land and guards and impunity. But at the deepest level, you have your elite facilitators. These are the local actors who are giving access and regulatory insulation and connecting the whole system back to the state institutions at the very highest levels. These are people like Hunh To, who is the cousin of Prime Minister Hunh Manette, and also simultaneously a board member and a documented thirty percent shareholder in a firm that the Treasury Department has called a primary money laundering concern of the US government. And which is also widely described now as the largest illicit marketplace in history. And while numerous of Hundo's Chinese business partners are now facing accountability, he r- has never been sanctioned, never been indicted, and is free to visit or invest in the United States today. And in light of all of this, it is important to remember that modern Cambodia was not formed in a vacuum. PRC tolerance and selective enforcement have played a major role in the descent. But democratic governments have also all too often accommodated, underweighted or look past criminal autocracy in Cambodia in pursuit of other goals. And fully recognizing that this is the China select committee and not the Cambodia select committee if your goal is to counter Beijing's influence, the democratic world has one real comparative advantage. And that is the promise of a different political future that is rooted in rule of law, accountability, human rights, and civic freedom. And in Cambodia, that advantage has been allowed to erode almost to the point of extinction, and we are now seeing and reaping the consequences of what grows in the space left behind. And admittedly, that is quite bleak testimony, but this is also not hopeless. State behavior, even in a profoundly compromised place like Cambodia, is more than a series of calculable conditions. It can be altered to quote one American thinker, by acts of cowardice or bravery, by wise leaders or cruel ones, and above all by good ideas and bad ones. And in Cambodia, much of the bravery, the wisdom, and the clarity has come from people working against the tide. These are the local journalists, the local civil society leaders, people embedded in the local fabric of this broken and failed state. And if we wanna counter scam states and other forms of criminal autocracy and malign influence around the region, we need to stand with these actors, not merely rhetorically or episodically, but strategically. And that that means three things as I close. First, we should apply pressure at the heart of the problem. Not just the foreign actors, not just the compound oligarchs, but the system-level facilitators, and in severe cases, to the system itself. Second, we need to pr- treat those front-line democratic actors, the local investigative capacity, not as nice-to-haves, but as core accountability in national security infrastructure. And third, we need to build an allied strategy that prevents this model from simply relocating and scaling elsewhere. Because I've spoken about Cambodia, but Cambodia is a warning. With state backing, cyber-enabled crime is lucrative, fungible and scalable, perhaps without any criminal historic precedent. And if we fail to address the underlying architecture, we will keep chasing compounds while the system continues to export harms with ever greater severity upon Americans and people across the rest of the world. Thank you.

Thank you. Mister Tower, the floor is yours.

Chairman Molnar, Ranking Member Khanna, distinguished members of the committee, thank you for the opportunity to testify today. Today I would like to highlight five key points from my written testimony related to the role of China in this growing crisis of scams. First, the Chinese party state, willingly or not, played a direct role in enabling the rise of industrial scale scam compounds over the past two decades. Police campaigns in China pushed illegal gambling syndicates offshore throughout the two thousands, flooding Southeast Asia with criminal actors who bred corruption, undermined governance, and created permissive environments for organized crime. These actors maintained deep ties into China and ultimately colluded with Chinese state-owned enterprises tied to the Belt and Road Initiative, uh with whom they constructed infrastructure that is now used for industrial scale scam operations. Second, as scam activity targeting China increased since twenty twenty, China has rolled out significant measures, including intense anti-scam campaigns, a ban on cryptocurrency, expanded surveillance, and a mass prosecution strategy, prosecuting over three hundred thousand individuals involved in scamming Chinese nationals since twenty twenty one. These actions have functioned to reduce losses significantly in China, but have globalized the problem as syndicates adapted their recruitment pipelines and shifted targets abroad. The result has been the rise of what is known in Chinese as foreigner butchering. Scam operations focus on non-Chinese victims, targeting especially China's geopolitical rival countries, such as the United States. Recent data from a major scam compound that was seized in Myanmar by pro-democracy ethnic armed organizations, showed that over fifty percent of the activity in that compound targeted plus one numbers. Third, as global outrage grows, China's leveraged this issue to expand its security influence, making anti-scam partnerships a centerpiece of its global security initiative, which aims to reshape global security norms and expand China's overseas security presence. Many countries now face a significant dilemma, cooperate with China at the risk of legitimizing and advancing China's GSI platform, or lose access to Chinese intelligence relevant to addressing this problem. Fourth, Myanmar illustrates the growing risk that China may leverage responses to on-line scams to advance broader geopolitical interests. After scam centers expanded dramatically in Myanmar following Myanmar's twenty twenty-one military coup, China cooperated with a Chinese-speaking ethnic armed organization to dismantle a major scam city uh on its border in the control territory of the Myanmar military. The military fought to defend uh the compounds that were largely scamming Chinese nationals but was defeated. Following that defeat, China had the opportunity to continue putting pressure on the Myanmar military towards eradicating more of these scam syndicates. However, fearing that instability could threaten Chinese strategic investments, Beijing later shifted away from broader eradication efforts, tolerating scam activity while focusing on stabilizing the military regime and weakening resistance groups. that might otherwise address the problems. Finally, as international attention increases, failures to comprehensively address scam operations in Southeast Asia have resulted in hundreds of thousands of scammers dispersing globally. This is not a Southeast Asia problem. This is a global China problem. Let me turn now briefly to what the US can do to address these challenges. The US has a blueprint for a whole of government approach, the Dismantling Foreign Scam Syndicates Act. which if made law would provide the US with many of the tools and resources needed. But as China-linked scam syndicates continue expanding globally, threats to the United States will become more and more acute. The US should establish a global response mechanism to monitor emerging scam hubs and coordinate preventative action uh preventative action with partner governments. Early intervention, anti-corruption initiatives, intelligence sharing, and stronger partnerships with civil society and media can significantly disrupt this expansion. Washington should also continue shining transparency on the role of Chinese state actors in enabling these criminal ecosystems while also seeking opportunities for productive coordination with China where interests align particularly on intelligent sharing and on tracing and addressing illicit financial flows. Third, the case of Myanmar requires creative approaches. In twenty twenty five, a key pro-democracy resistance. the Korean National Union, conducted a textbook demo mobilization of a major scam compound, gathering evidence, facilitating arrests, and exposing operations internationally through partnerships with media and civil society. This directly enabled US-Thailand cooperation, resulting in the arrest and uh indictment of two major China-linked criminals associated with that scam compound. The United States should deepen cooperation with non-state in Myanmar who are working towards democracy in the country, and who have outperformed both the Myanmar military as well as neighboring countries such as Cambodia in dismantling scam centers. Ultimately, addressing the rise of China-linked scam syndicates must become an integral component of the broader US strategic competition with the Chinese Communist Party. Thank you.

Well, thank you. Uh, thank you to all the witnesses, and now, uh, we'd like to have a round of questions. And uh, I'll recognize myself for five minutes of questions. Uh, we start with Miss West, uh, first of all, I wanna thank you for all the work you've been doing, representing victims across the United States that have been targeted by these, scam centers. Uh, like uh, representative uh, Conner, I, I wanna just say our heart goes out to all the victims, and uh, I understand uh, some of the victims are here with us this morning, and we are so saddened to hear what you've been through. Um, Miss West, what is the one message that you want to make sure we hear from the victims of these scams?

They're not being heard. And when they are reporting to law enforcement, they are not getting any help. And that's leading them to get secondarily scammed. It's leading them to do their own research and solve their own cases, or to simply Google it and find someone who claims they can help them who is the secondary scam. And so th- there are ways to fix this, and that is recognizing and empowering local and state law enforcement to have the resources to meet those victims when they come through the door, and provide them with the tools and training they need to do quick evaluation as to whether or not there's something that can be done with their cases.

Thank you. Uh, Mister Sims, can you walk us through how the Chinese government deliberately pushed out the scam center operators from within China to other countries, which effectively enabled these frauds on Americans?

Yeah, so effectively this is uh a result of a domestic crackdown on organized crime, uh that happened starting uh several decades ago, uh and is is continued. And so what you've seen, quite similar to the mode that we see today where when this these issues of of crime arise to a level to where they conflict with the interests of the Chinese government, is that they take action, but that action has consistently had a displacing effect. And and the origins were criminals who found their way out of mainland China and into the region and found these more permissive environments that allowed them to grow, and to flourish.

Can you help us understand the direct links that the committee's investigative report found between a Chinese government-owned construction company and one of the largest scam poun- scam compounds? I think this is important because it shows a direct link from the scam compounds to CCP leadership in Beijing.

Yep, absolutely. So, uh, the the person in question that a ranking member mentioned in in his comments as well is Chinza. uh who was the head of Prince Holding group which treasury is described as one of the largest transnational criminal organizations in the world. Um treasury also or uh justice department seized about fifteen billion dollars in crypto assets from them um back in October. And but Chen Zeh had uh outstanding legal trouble in China dating well back before uh his scam compounds emerged. And uh I think back in twenty eighteen uh Prince Holding Group actually contracted directly with uh a a Chinese state owned enterprise uh that we referred to in the report as as Bureau Four to construct buildings around Cambodia including a number of the scam compounds uh that later later came and so this is at bare minimum a profound gap in scrutiny and due diligence uh between an apparatus of the Chinese government and what was at a person who was at that point already becoming well known as a transnational criminal.

uh mister tower you've highlighted how beijing has used crackdowns on scam compounds to expand its security influence in southeast asia how should the united states balance cooperation with regional governments on counter scamming operations while preventing china from leveraging these operations to deepen its own geopolitical influence

Thank you for the question. I think what's key here is having a presence of uh US law enforcement in the region, as well as having um you know, a range of actors partnering with the US, including civil society, including media, to show some of the advantages of the US approach to addressing these problems. Um, you see where China is advancing um these various forms of joint law enforcement cooperation. which effectively are placing Chinese uh police on the ground. Um in many cases uh Chinese police then almost acting autonomously on on foreign territory, um pushing to enhance broader Chinese security access in many of these countries. And I think you're seeing countries on the front lines like uh Thailand in particular are coming under a lot of pressure. But also you're increasingly seeing in geostrategically important areas like the Golden Triangle region, uh which is the area between uh Laos um uh Thailand and Myanmar, where China is actually far from its borders, developing um even informal forms of police stations on the ground in response to this. Um I think what the US can do is show the advantages of um US uh forms of policing. Um it can also provide and strengthen the ability of uh countries like Thailand to hedge, as they're faced with pressure from countries like China. um to accept a Chinese police presence having the US um you know they're working with Thailand working with other countries in the region um gives those countries access to US resources and know how uh while also giving US access to critical intelligence which it can then I think use to approach China on these issues from more of a vantage point of strength if the US is going and engaging China just simply asking for help without having that intelligence without having access to many of the devices that have been seized in cross-border operations around uh Thailand's borders, or in the Philippines or other countries in the region where you've also seen um law enforcement uh demobilize large scam compounds, without having that information, you know, I think transactionally uh China is going to be demanding quite a lot for assistance. However, if the US is shining transparency, working with partners to address these issues, it can approach China from a position of strength, and demand that China take action on many of these, uh, so-called foreigner butchering operations that are now increasingly targeting Americans.

Thank you very much. Uh, now I'd like to recognize ranking member for five minutes of questions.

Thank you, Mr. Chairman. I believe America should be seeking restitution from these crime bosses and give the money back to victims. If the Chinese, Cambodian and other governments cooperated, how could we go about doing that to any of the

Uh, thank you for your question. Um, the first thing we have to do is we've gotta find this money, and that is doable. I think we have to, um, we I've always operated with a what if we could mindset and what if we could find additional money that that is out there that belongs to victims. We should be doing a full scale investigation using the data that we already have, to identify where this cryptocurrency or cashed out cryptocurrency is located, and we should be recovering it for the victims. This is all doable work. We have not had the resources or the or the really the um the the We haven't had the we haven't had people at the highest levels of government supporting that this needs to be done for victims and that's really what we need.

Yes.

if i may add uh this is a very important question uh there there's also a a real life applicable uh solution to this we we actually this is not a uh a necessarily hypothetical question we have fifteen billion dollars of bitcoin that was taken from one of these uh criminal actors that is sitting and it's it is undetermined as of yet what is going to happen with that um i'm not i know that we're not here to like get into all the legal specificities of what happens with that money but the executive order by the end of the

who has that money?

Uh, I think the Eastern District of New York uh holds it right now. The executive order that came out in March states, at least, that that money, not that specific money, but money reclaimed should, all effort should go to that money being returned to the victims of the crimes. And so I would, I would urge officials to, to make sure that that happens, because we have a, a world-changing amount of money that's just sitting there ready to go back and repay victims.

Um, i- if I could add, I think you've seen where um FinCEN has started to target many of the underground um uh banks and um uh on-line guarantee systems that Chinese criminal groups are using to move um massive amounts of illicit crypto-currency stolen in the scams. And I think current estimates, and these are very conservative estimates, are that twenty percent of global illicit crypto-currency flows are processed by Chinese effectively Chinese organized crime groups. Um, some of these early efforts have already, I think, shown that it's possible to have significant disruptions to start cutting some of this off from um the global financial system. That said though, if you look right now on Telegram, there are countless numbers of these types of guarantee platforms that continue to process large amounts of cryptocurrency. And I think many of these, the vast majority of them, are not household names. No one's really I think doing that um gathering of that open source intelligence, mapping out these different um illicit cryptocurrency laundering services, and then really looking at how to comprehensively target these, as well as to target platforms like Telegram that are used extensively to move those illicit flows. So I think that's ultimately where much more investment needs to go, is in monitoring these illicit flows, particularly on cryptocurrency, and looking at how um we can bolster some of the efforts

thank you my last uh question is the trump administration has defund or shutdown usaid, usip and the ned

uh

Uh, the reality is that these entities have helped expose the China-link scammers, uh, to all of our witnesses, should all these agencies be fully funded and restored.

Due to my role on the committee, I can't advocate for the funding or defunding of specific organizations, but I I will say broadly speaking, the local civil society groups that I I mentioned need three things. They need protection from repression, they need funding, and they need the right kind of funding. And right now they have zero of those three things. Uh, and as we rebuild foreign assistance, we need to prioritize nimble, hostile environment funding that actually can reach the people who are doing the real work.

This was.

Confirmed. I think the problem that we have in the locations that this, these crimes are happening is we don't have eyes on the ground, where previously we did have a lot of eyes on the ground. And so unfortunately with the defunding of so many of these entities, we have lost visibility into what's really happening there. So refunding is an absolute priority.

This is largely echoing what's already been said, but I think that the role of uh independent researchers, media, and civil society is one of the most critical uh parts of the response. It's what has informed US sanctions until present. It's what I think ultimately has uh assisted the US in seizing the funds that have been seized thus far. Um, so without, you know, I think sustained uh funding to these types of groups, I don't think you're going to see the replication of what has been achieved over the past, um, couple of years in terms of um these initial seizures, these initial uh indictments, and um also, you know, the ability to put in place uh defensible types of sanctions packages. So I think it's really critical that that support goes to uh civil society to researchers and to others that are working on the ground to make um this response possible.

Thank you. Representative Lihut.

Well thank you Mister Chairman, and thank you for having this important hearing today. I wanna welcome our witnesses, and uh grateful for your valuable testimony here today on this important topic. Um as we've heard this morning from uh from you and from my colleagues uh these scamming systems are really stealing generational wealth from americans and um really the current us response is is inadequate and in addition to serving on this committee i also serve as the chair of our work and welfare subcommittee committee on the ways and means committee and our work um on that subcommittee uh has demonstrated the vast network of fraud and scams targeting government programs uh and uh and targeting some of our most vulnerable populations here in the united states time and time again victims of fraud and scams wait years before receiving compensation and criminals who engage in this predatory behavior obviously must be prosecuted to the fullest extent of the law and victims must be made whole in a timely manner with increased access to digital infrastructure and advanced technological tools like cryptocurrency and artificial intelligence and fraud the fraud echo systems that currently exist uh they continue uh to wreak havoc in many ways on our system and there is not a i guess a good one size fits all approach um on on how we coordinate on this issue um but i do think it's uh fair to say that congress must insure we provide the necessary resources and tools to our federal agencies in order to keep up with the evolving scam echo system So, Mister Sims, in your written testimony you mentioned that the US Department of Treasury estimates that Americans lose more than ten million dollars annually to Southeast Asia-based scam networks uh can you comment on what current mechanisms does the federal government have at its disposal to compensate victims of these scam networks and and depending on that answer what would be your recommendations on the direction we should go legislatively?

Sure, thank you for the question, and just to to clarify, it is ten billion with a B, um, which is is likely itself significantly under-reported given the uh the stigmas associated with this crime, and uh it's been uh sort of stated up here already, this is potentially the the largest form of financial crime impacting Americans today. Um, I I'll r- repeat something I said earlier, that the fifteen billion dollars uh that we recouped from Prince Holding Group, transnational criminal organization back in October, represents the single largest pot of money with which to make victims whole, both American scam victims and victims of trafficking that were uh under the scourge of of Prince Holding Group's uh uh criminal activities. Um, what the exact mechanisms to get that money to victims needs needs to be needs further evaluation, but we absolutely, in order to continue getting that money to a place where we could actually have the ability to do that, We need to make sure that we are fully funding, not just a law enforcement response because uh, I think as we've we've discussed and as your report uh rightly notes, this is well beyond a law enforcement challenge. We need to make sure the federal, the state, the local law enforcement uh is funded, have the resources to do their job, but we also need to make sure that our embassies, that our foreign policy apparatus, that our intelligence community is equipped and resourced in a way that we can work with

And Mister Tower, uh, can you talk about the current responsibilities of private sector companies, or the private sector in general, to prevent their infrastructure from being manipulated or used, in, by these criminal syndicates?

Yeah, so, I I think you're seeing that the criminal syndicates, if they don't have access to social media, if uh if it weren't for the ability of criminals to go onto social media and target people, you would see that many of these crimes would never take place. Um, I think the the bottom line is that's both with respect to um targeting victims of scams, uh targeting victims of the so-called job scams or trafficking, that social media is used extensively. Um, there is a nascent response, but I think uh the response is nowhere near the gravity of the problem until present. And until you have a much stronger, I think, response on the part of social media companies, these problems are going to get greater and greater. Of course, I think along with that, um, if you look at the overall um, supply chains kind of down around where these compounds are are located, effectively what you have in many of these epicenter countries are scam economies. There's layer after layer of business, businesses that are providing the concrete, businesses that are providing the internet connectivity, the telecommunications that are providing um almost industrial scale sales of SIM cards from pretty much every country across the world you have many uh businesses that are involved in enabling um these crimes I think one urgent task that needs to be carried out is a full look at supply chains globally how are supply chains uh enabling um this criminal activity and then you know what sorts of regulatory actions

Thank you. I yield back.

Thank you, Representative Moran.

Thank you, Mister Chairman, and thank you to our witnesses here today. Transnational crime organizations are indeed stealing the life savings of our families and committing mass fraud by deceiving their victims. Retirement counts are drained and the hard-earned wealth for our nation's citizens are stolen by crime groups. that operate these scam centers that we've been talking about today. This theft is severely affecting our country while China complicitly allows these operations to grow across Asia, as you guys have pointed out. In two thousand twenty-four, Americans lost at least ten billion dollars to cyber scam operations. This is an industrial scale criminal enterprise run by Chinese transnational crime org organizations out of the compounds in Southeast Asia, built on human trafficking, forced labor and sophisticated digital fraud. These scam centers across the globe target constituents in every state, of every race and gender, and they are party agnostic. US Attorney General Pirro has uh US Attorney Pirro has described what these scam centers are doing as creating quote " a generational wealth transfer from Main Street America into the pockets of Chinese organized crime." I think that framing is is exactly right. We're not talking about a carna- artist running a scheme out of a garage, we are talking about compounds the size of

Thank you, thank you for the question. Ultimately, what makes this system different is the scale, the sophistication, and the amount of protection that they receive. Um, we have protection meaning from a very wide array of factors, but starting at the level of the host governments in which uh they are based. Um, but also extending to what I would describe as statutory immunity for the large private sector organizations through which a lot of this is facilitated. Um, and so in terms of like how - how your - how your constituents can be helped, um, first of all, please, please, please do not, uh, engage with people who are reaching out to you that you don't know. That is basically as - as - as - it's an - it's an insufficient, it's totally inadequate, um, but don't - don't give money to people that you have met online. I think what you said, though, is absolutely accurate. Every single demographic, every single person could fall victim to this. And uh there was a a a quote I heard just yesterday um that there's writing on the walls of some of these compounds that say, there's not a single person who can't be scammed, they just haven't seen the right script at the right moment. As we just need to be vigilant, and we need to make sure that our infrastructure here in this country is providing a distributed form of resilience to this distributed threat as the report notes.