Sri Lankan authorities are grappling with a sharp rise in cybercrime as foreign scam networks relocate from Southeast Asia, raising concerns about the integrity of the country’s emerging regulated gambling industry.

Since the start of 2026, police have detained over 1,000 foreigners, primarily from China, Vietnam, and India, for alleged involvement in online fraud. This figure more than doubles the 430 arrests recorded in 2024. Police spokesman Fredrick Wootler said that raids have been extensive, including a sweep in the Galle and Matara districts that netted 192 Indian and 29 Nepali suspects in a single night, a Colombo operation capturing 280 foreign nationals, and a March raid detaining 135 Chinese individuals at one compound alone. Authorities now report receiving daily tip-offs about scam activities across the island.

The networks involved operate well-known schemes, including pig butchering, rigged betting platforms, and fraudulent cryptocurrency ventures, targeting victims across Asia in multiple languages. Officials noted that these operations exploit the same infrastructure intended for the legitimate industry, such as high-speed internet, affordable office and residential rentals, and accessible tourist visas.

Enforcement Efforts Intensify

Sri Lanka has taken steps to legalize and regulate online gambling with the passage of the Gambling Regulatory Authority Act in 2025, which establishes a single regulator to oversee casinos, online platforms, and sports betting. The GRA aims to be fully operational by June 30, 2026, with a mandate that includes AML and CTF compliance in line with FATF recommendations. The launch of City of Dreams Sri Lanka, a $1.2 billion integrated resort, has positioned the country as a premium gaming destination and aims to attract up to half a million Indian tourists this year.

Authorities are warning property owners not to rent villas or offices to suspected scam operators, with potential prosecution for complicity. Immigration officials have increased their involvement in investigations as the number of cases grows. Customs officers recently intercepted nine Chinese nationals attempting to smuggle hundreds of laptops and mobile phones, suspected of being used in large-scale fraud operations.

Police and regulatory agencies have identified that scam networks displaced from Cambodia and Myanmar have shifted operations to Sri Lanka, taking advantage of the island’s relaxed visa rules and reliable internet. While initially targeting primarily Chinese-speaking users, criminal groups have expanded into multiple languages and across different Asian markets, including India, Vietnam, and the Philippines. Concerns are rising that local Sri Lankans could become targets.

According to Asia Gaming Brief, authorities are also investigating whether foreign syndicates were behind a recent cyberattack on the Ministry of Finance, which resulted in an estimated $2.5 million in losses.

International Cooperation

The Chinese government has acknowledged the shift of illicit operations to Sri Lanka and pledged to work closely with local law enforcement to combat cybercrime. A 2026 United Nations report estimated that at least 300,000 people have been trafficked into scam centres across Southeast Asia, reflecting a broader regional crisis. Sri Lankan officials confirmed that no trafficked foreigners have been identified in the country so far, although dozens of Sri Lankans have been rescued from scam centres abroad in the past year.

Police continue to conduct raids and deport foreigners who overstay visas while ensuring offenders involved in online crime are prosecuted. Wootler emphasized that authorities are acting decisively to prevent Sri Lanka from becoming a base for criminal operators exploiting both digital and physical infrastructures.