Myanmar's armed groups now earn more from scam compounds and drug trafficking than any peace deal could likely offer them, turning crime from wartime opportunism into the war's actual foundation and leaving negotiators nothing left to trade.
Five years after its February 2021 coup, Myanmar is a laboratory for a new political order, where armed conflict and transnational organized crime have fused into one self-sustaining system. The junta lost most of the country, with reports saying it now controls between 21-33 percent of the land, and still kept its grip on power. The 2025 Global Organized Crime Index puts Myanmar [first of 193 countries for criminality](https://ocindex.net/country/myanmar), at 8.08, and last for resilience, the ability to deal with that crime, at 1.46. No country shows a wider gap. That raises the question: What happens to peace efforts when belligerents earn more from war than from ending it?
A State Built on Crime
Myanmar's cyber-scam compounds show the shift most clearly. The UN Office on Drugs and Crime (UNDOC), in its 2026 threat assessment, calls Southeast Asia's criminal economy "interconnected," in a single service-based industry spanning borders from Myawaddy to Laukkai.
Workers arrive through an elaborate pipeline. UNODC has identified people from at least 80 countries inside the Myanmar compounds. Many answered fake job ads, flew into Bangkok, were driven more than 490 kilometres to Mae Sot in northwest Thailand and then smuggled across the Moei River at night.
Scam losses across East Asia, Southeast Asia, Australia, and New Zealand ran between 88 and 114 billion dollars in 2025, UNODC reported. Inside the compounds there were confiscated passports, debt bondage, beatings and electric shocks, according to the UN Office of the High Commissioner for Human Rights, keep trafficked workers compliant, and families are extorted for ransom.
At the top sit overseas crime bosses, most of Chinese origin. Wan Kuok-koi, known as "Broken Tooth," has been since December 2020 on the U.S. sanctions list. According to the U.S. Treasury Department, he is a member of the Communist Party of China’s People’s Political Consultative Conference and a leader of the 14K Triads, a notorious criminal gang that “engages in drug trafficking, illegal gambling, racketeering, human trafficking” and other enterprises.
In 2018, Broken Tooth established the headquarters of the World Hongmen History and Culture Association in Cambodia. According to the U.S. Treasury, Broken Truth’s operation “has managed to co-opt elite figures in Malaysia and Cambodia,” continuing a pattern of overseas Chinese actors trying to paper over illegal criminal activities “by framing their actions in terms of China’s Belt and Road Initiative, the China Dream, or other major initiatives” of the Chinese Communist Party.
The people executing the scams are often trafficked labourers under threat of violence.,
None of these criminal enterprises work without local partners. Myanmar's military-aligned Border Guard Forces, the Karen National Army chief among them, supply protected land and impunity for a direct cut of the proceeds, the Justice for Myanmar website reported in 2024.
From Ceasefire Capitalism to Coup
After the Communist Party of Burma collapsed in 1989, the military junta bought ceasefires by granting ethnic armed groups autonomous territory and informal license over resources and illicit trade. Kevin Woods writing in the Journal of Peasant Studies named the practice "ceasefire capitalism" in 2011.Woods is a political ecologist and researcher specializing in Myanmar.
The 2021 coup, after a decade of partial democratic opening, shattered what formal governance remained in Myanmar. Facing sanctions and financial isolation, the ruling junta and its allied militias grew structurally dependent on the illicit revenue filling the vacuum, the UN Special Rapporteur documented in 2026.
A Self-Reinforcing War Economy
Patrick Meehan, in a June 2026 briefing note for the University of Birmingham's Serious Organized Crime & Anti-Corruption Evidence Research Programme, calls the paramilitary-crime nexus a two-way relationship. Conflict degrades state capacity to deal with it and opens governance gaps that crime exploits; the proceeds the criminal organizations gain then fund the weapons and militias that prolong it.
In Kachin State, armed groups extract rare-earth elements, the minerals inside smartphones and electric vehicles, through in-situ leaching, driving hundreds of pipes into a hillside and injecting acid, the UN reported.
Farmers in Bhamo and Chipwe were cited in Meehan's 2025 study of Kachin rare-earth mining as saying Chinese merchants stopped buying their walnuts and black cardamom after laboratory tests for chemicals.
Meehan reported that illicit revenue also buys black-market weapons that rival state arsenals, letting militias fight on without civilian taxation or central approval. It gives them an existential reason to block peace, because a functioning state threatens their business.
Independent global monitor Armed Conflict Location & Event Data recorded 277 incidents in which armed groups captured towns and bases from the military in the first 11 months of 2024, up from 62 in all of 2023.
Why Conventional Fixes Fail
Standard anti-crime programming trains police, funds border control, and builds institutional capacity. All of it assumes a state willing to police its own funders. Myanmar's junta will never dismantle the militias keeping it solvent, Meehan says.
Raids on individual compounds produce a balloon effect. After the military's own campaign from September 2025, operations around Myawaddy moved south along the Thai border and leaders relocated workforces to Cambodia. Myanmar Witness has counted more than 137 suspected scam sites since the coup.
Effective intervention must reach the architecture. The U.S. Treasury Department settled on the TRON blockchain, the shell companies and the underground banking networks carrying the proceeds. However, a scam compound might find it cheap to simply rebuild elsewhere.
The Fix Is Political
According to security expert Mathias Valdez Duffau, organized crime has mutated from wartime opportunism into the governing logic and foundational political economy of Myanmar’s conflict, precisely because the nation has become a state captured by a kleptocratic military regime, where illicit economies dictate political survival, and the junta and its militia proxies are structurally dependent on scam syndicates and resource looting. Belligerents and military-aligned factions extract vastly more sustainable revenue from these illicit enterprises than any conventional peace settlement can offer. Duffau notes that treating this crisis as a technical capacity-building challenge rather than a fundamental political-economy problem is a fatal error; because standard institutional reform only empowers a predatory war machine, mimicking flawed precedents such as Timor-Leste’s experiences risks merely rebranding profitable militia businesses under a new national flag.
Consequently, ending the war requires reversing standard international sequencing: Interventions must first dismantle transnational financial networks and explicitly renegotiate power and revenue distribution, shifting local ownership away from a captured state toward community administrations and civil society in opposition-held areas before any institutional reform can succeed.
