US imposes sanctions on Cambodian tycoon over scam centers

By David Brunnstrom, Francesco Guarascio and Poppy McPherson

WASHINGTON (Reuters) -The United States announced sanctions on Thursday on Cambodian businessman and ruling party senator Ly Yong Phat as well as several entities over alleged abuses related to workers who were trafficked and forced to work in online scam centers.

The move, plans for which were first reported by Reuters, comes at a delicate phase in relations between the United States and Cambodia, which has moved ever closer to Washington's strategic rival China despite U.S. efforts to woo its new leader Hun Manet, son of longtime strongman Hun Sen.

Ly Yong Phat was appointed Hun Sen’s personal adviser in 2022.

The U.S. Treasury Department's Office of Foreign Assets Control said the sanctions targeted Ly's L.Y.P. Group Co. conglomerate and O-Smach Resort.

It said it was also sanctioning Cambodia-based Garden City Hotel, Koh Kong Resort, and Phnom Penh Hotel for being owned or controlled by Ly.

Bradley Smith, the Treasury's acting under secretary for terrorism and financial intelligence, said the move was made to "hold accountable those involved in human trafficking and other abuses, while also disrupting their ability to operate investment fraud schemes that target countless unsuspecting individuals, including Americans."

Cambodia and other countries in Southeast Asia have emerged in recent years as the epicentre of a multibillion-dollar criminal industry targeting victims across the world with fraudulent crypto and other schemes, often operating from fortified compounds run by Chinese syndicates and staffed by trafficked workers.

The Treasury statement said scammers leverage fictitious identities and elaborate narratives to develop trusted relationships and deceive victims.

In many cases, this involves convincing victims to invest in virtual currency, or in some cases, over-the-counter foreign exchange schemes, it said.

The statement said traffickers force victims to work up to 15 hours a day and, in some cases, "resell" victims to other scam operations or subject them to sex trafficking.

It noted that the U.S. State Department's annual Trafficking in Persons Report this year highlighted abuses in O’Smach and Koh Kong and that official complicity in trafficking crimes remained widespread, resulting in selective and often politically motivated enforcement of laws.

Americans have been targeted by many of the scams. In 2022, in the U.S alone, victims reported losses of $2.6 billion from pig butchering – a type of long-term scam – and other crypto fraud, more than double the previous year, according to the FBI.

The Treasury report said that for more than two years the O-Smach Resort has been investigated by police and publicly reported on "for extensive and systemic serious human rights abuse."

It said victims reported being lured there with false employment opportunities, having phones and passports confiscated upon arrival, and being forced to work scam operations.

"People who called for help reported being beaten, abused with electric shocks, made to pay a hefty ransom, or threatened with being sold to other online scam gangs," it said, adding that there had been two reports of victims jumping to their death from buildings within the resort.

The report said local authorities had conducted repeated rescue missions, including in October 2022 and March 2024, freeing victims of various nationalities, including Chinese, Indian, Indonesian, Malaysian, Singaporean, Thai, and Vietnamese.

The U.S state department said in June that Cambodian government officials were complicit in trafficking and that some officials owned facilities used by scam operators.

Spokespeople for Cambodia's government and foreign ministry did not answer phone calls or respond to messages seeking comment when asked about the sanctions.

The U.S. and other governments have repeatedly engaged with Cambodia to put a end to the scam centers.

Washington had considered sanctions for months, sources briefed on the matter told Reuters. They said the decision was initially expected earlier this year but had been delayed.

A change of leadership to West Point-educated Hun Manet last year was seen by U.S. officials as an opportunity to mend ties with Cambodia, but despite U.S. efforts, its ties with China have steadily grown. Beijing sent warships to Cambodia this year and is backing the expansion of a key naval base.

(Reporting by Francesco Guarascio and Poppy McPherson; additional reporting from Simon Lewis; editing by Shri Navaratnam and Deepa Babington)