Experts have warned that Sri Lanka is emerging as a hub for transnational cybercrime, after a crackdown in south-east Asia pushed Chinese-run criminal networks to relocate their vast scam operations.

Sri Lankan police spokesperson Fredrick Wootler said the country was witnessing an “alarming increase of cybercrimes” perpetrated by people entering the country as tourists, and then illegally setting up scam operations targeting people across the world.

Authorities in Sri Lanka have carried out more than a dozen raids on alleged scam operations in the country since the beginning of the year, arresting and deporting almost 700 foreigners accused of involvement.

On Thursday, the Sri Lankan police carried out its latest raid in the capital Colombo where they detained 18 Chinese citizens and one from Laos. The Guardian visited the site of the raid, and found that the scammers had left behind dozens of fake documents, from a falsified legal certification, fake US treasury documents and fake company registration, stating their company was worth $10bn.

An officer from the crime investigation bureau who carried out the raid, and wished to remain anonymous, said they had also discovered 62 passports, mostly for Chinese nationals.

“They had phones, laptops, pen drives, RAMs, a processor, a stamp to forge documents, and so many forged documents. One certificate, which we found was also forged to show that they were a business registered in the US, was framed and hung on the wall,” he said.

The majority of those arrested and deported for involvement in scams this year have been Chinese citizens, but people from Vietnam, India, Indonesia, Laos, the Philippines, Malaysia and Myanmar have also been detained in raids. The police said all those arrested had come to Sri Lanka on tourist visas.

The transnational scam industry that flourished in south-east Asia over the past decade has become of the largest organised-crime enterprises in the world. It is mostly run by Chinese gangs and staffed by hundreds of thousands of workers, many trafficked or coerced into the job.

From vast fortified compounds in Cambodia and Myanmar, large scale fraud factories orchestrate operations that run from romance scams and crypto fraud, to online gambling and money laundering on a global scale. The United ​States estimates Americans lost $10bn to south-east Asian scam centres in 2024.

Yet as political pressure has grown on host countries in south-east Asia, scam compounds have faced a significant crackdown from authorities, pushing the Chinese operatives and crime syndicates to find new locations to set up operations.

According to experts, Sri Lanka has emerged as a favoured new destination, due to the ease in getting tourist visas and the newly introduced “digital nomad” visas. There is also limited regulation on sim cards and internet connections, as well as a wide availability of offices and hotels to rent for a low price.

There is already a significant Chinese presence in Sri Lankan infrastructure and business, and Chinese visitors are not seen as uncommon. Sri Lanka has also relaxed rules around online gambling and gaming, and its mechanisms to go after cybercrime are seen as limited. The current modus operandi is mostly to deport foreigners found carrying out cybercrimes, rather than prosecuting them.

Mark Bo, cybercrime researcher and author of Scam: Inside Southeast Asia’s Cybercrime Compounds, said he had noticed a shift in operations towards Sri Lanka starting two years ago, as it began to be mentioned in posts on the messaging app Telegram, as well as in recruitment drives.

“After the crackdown really ramped up in Cambodia, I saw a lot more posts on Telegram channels of people saying they were moving to Sri Lanka,” said Bo.

“There’s clearly been some kind of transplanting of the exact same set-up there. It shows the challenge of controlling the industry because one of its defining characteristics is how mobile and how adaptable it can be.”

The operations have been accelerating beyond the control of the authorities. Businessmen in Colombo complained that the rents for office spaces had more than doubled in some complexes, due to the surge in demand and high prices paid by groups coming in from China.

Rather than setting up visible compounds, police found these operations tried to avoid detection by working in small groups of five people, which rotate around different hotels, apartments and offices every three months. The officer said the operations they had busted recently were clearly backed by huge sums of money, with eight floors of an apartment building rented out in one incident.

Superintendent of police, Kamal Ariyawansa confirmed it was a Chinese crime syndicate behind the operation, which was attempting to scam American victims into investing in a fake US company.

The Chinese embassy in Colombo has publicly acknowledged the involvement of its citizens in telephone fraud gangs, which they said had moved to Sri Lanka after the crackdown in southeast Asia. “Cases like these pose immense harm, and the Chinese embassy provides full support to Sri Lankan law enforcement agencies in resolutely cracking down on suspects,” they said.