Fraud today is a work of gangs that operate across borders. Worth more than $1 trillion, this industry doesn’t just steal money – it destroys lives. In the first part of our fraud series, we explore who is behind the fastest-growing schemes today, where are the hubs of so-called scam compounds and what financial organizations must understand about their opponent.
For decades, pop culture painted fraudsters as solitary figures hunched over laptops in darkened rooms. That stereotype is not only wrong, it is dangerously outdated. Today’s most damaging scams are orchestrated by global crime syndicates spanning every continent. These networks build tens of thousands-strong operations, traffic people, train their “staff” and basically operate like Fortune 100 companies, but their product is deception, and the victims pay the cost.
Their scale is staggering: global fraud reached over $1 trillion in 2024. The numbers, however, tell only part of the story. The fastest-growing schemes today are app-based and social engineering scams, which are also the most common types of fraud affecting banks and financial institutions, causing record losses from reimbursements and compliance costs.
These attacks not only target systems, but exploit people, undermining trust in financial institutions, regulators, and courts, while also supporting human trafficking and forced labor. Behind every fake investment ad or romance scam lies a darker reality: compounds where people are held captive and forced to defraud strangers across the world.
Global scam centres: Where to find them
When most people think of criminal gangs, they imagine shadowy figures operating from jungles or remote hideouts. But the criminals behind the world’s largest fraud rings work very differently. These aren’t small-time operations running in the dark, they’re industrial-scale enterprises operating in plain sight.
Their structure closely mirrors those of legitimate businesses with executives overseeing operations, middle managers coaching employees and tracking KPIs and frontline workers executing scams via phone, social media or messaging apps.
Their facilities are not hidden in basements. They are large, purpose-built sites, often converted from former hotels, casinos or business parks. Located primarily in Southeast Asia – in Cambodia, Myanmar, Vietnam, and the Philippines – but increasingly also in Africa and Eastern Europe, these complexes can be vast. Investigators have uncovered huge compounds where hundreds of people work in rotating shifts, day and night. Some sites are so large they have been described as “villages,” covering dozens of acres, with syndicates often running multiple locations across regions. At scale, this means a single network can control thousands of people.
However, not all people who work for syndicates on site, are there voluntarily. In fact, most of the front-line workers and call centre agents are victims of human trafficking. Lured by the promise of big money and escape from poverty, they travel across borders, only to find themselves kidnapped, captured and coerced into deceiving others.
Life inside scam compounds: A prison disguised as an office
On-site structure is designed to sustain a captive workforce. They include dormitories, shops, entertainment rooms, kitchens and even small clinics. On the surface, these facilities might resemble employee perks, and for vulnerable recruits from poorer backgrounds, they can even sound appealing, but the reality is dark: rows of desks, bunkrooms stacked with beds, CCTV cameras monitoring every corner, kitchens feeding hundreds. With razor-wire fences and armed guards at the gates, these compounds look more like prisons rather than offices. And in many ways, that is exactly what they are.
The “masterminds” of the crime ecosystem
Behind the compounds lies a web of transnational operators and a shadow service economy. The organisers of these operations come in many forms – from criminal entrepreneurs diversifying from drugs to online scams, to networks linked with regional crime groups such as Southeast Asian gangs, Chinese or Eastern European syndicates, and illicit operators tied to South American cartels. In some places, politically connected actors or local elites profit from – and even protect – these operations, ensuring they continue with little interference.
Another layer consists of companies that appear legitimate on paper but in reality, supply the infrastructure that keeps the fraud industry running: phone numbers, fake identity documents, shell firms and payment processors willing to handle high-risk transactions. Investigations have uncovered, how underground service providers and proxy accounts help scammers move victims’ money through banks and into crypto using fake invoices and front companies as cover.
It’s an industrial-scale business model: acquisition channels built on fake ads, call centres with scripts and a laundering pipeline powered by mules, shell companies and crypto gateways. The setup is remarkably resilient – shut down one centre or payment route, and the network simply reroutes through another provider or jurisdiction.
How fraud hurts banks and other financial companies
For banks and financial firms, the impact is severe. Direct financial losses and costs to financial institutions are significant and rising. Banks, fintechs and credit unions report substantial direct fraud losses: nearly 60% reported losing over $500k in direct fraud in a 12-month period and a large share reported losses over $1m. These trends force firms to allocate budget away from growth into loss-prevention and remediation.
Payment fraud at scale also increases operational and compliance costs. For example, in 2022, payment fraud was reported at €4.3 billion in European Economic Area and consumer-reported losses in other jurisdictions show multi-billion-dollar annual impacts that increase every year – all of which ripple into higher Suspicious Activity Report (SAR) volumes, Anti-Money Laundering (AML) investigations and strained dispute and reimbursement processes for banks. These costs are both direct (reimbursed losses) and indirect (investigation time, compliance staffing, fines, customer churn and reputational damage).
Banks face a daily balancing act: tighten controls and risk frustrating customers or loosen them and risk becoming a target. Either way, regulators demand ever-stronger safeguards. And even though stronger authentication and checks can increase drop-offs during onboarding or transactions, failure to comply risks exposure to legal and regulatory trouble (recent cases tied to payment rails illustrate how banks can face large remediation obligations and lawsuits if controls are perceived as inadequate).
The long-term consequences, however, go beyond operational complexity. Fraud undermines customer trust, which is the foundation of finance. It increases costs, slows innovation and forces financial institutions to redesign products with restrictions that customers feel but rarely understand. And this can lead to a long-term loss of market share.
What financial institutions must understand about the opponent
Banks are not fighting individual perpetrators. They are facing industrialized criminal organizations. To defeat them, defensive measures must also be organized accordingly.
This means moving beyond isolated controls toward systemic resilience: robust fraud checks, stronger identity verification, continuous monitoring, transaction orchestration and faster coordination with law enforcement. But technology alone is not enough. Collaboration across institutions and industries is crucial to disrupt fraud networks that operate globally.
How financial organizations can protect themselves against financial crime
Financial firms should invest in multi-layered identity checks combining document, liveness and behavioral signals (like the ones offered by IDnow); integrate real-time AML orchestration to flag mule activity early (like the soon-to-be-launched IDnow Trust Platform); and participate in intelligence-sharing networks that connect patterns across borders.
Fraud is no longer a fringe crime. It’s a billion-dollar corporate machine. To dismantle it, financial institutions must shift from investigating fraud after it happens to preventing it before it strikes, stopping both criminals and socially engineered victims before any loss occurs.
By
Nikita Rybová
Customer & Product Marketing Manager at IDnow
Connect with Nikita on LinkedIn
