The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned Cambodian businessman Ly Yong Phat, his conglomerate L.Y.P. Group Co., LTD, and O-Smach Resort for their involvement in serious human rights abuses linked to the treatment of trafficked workers subjected to forced labor in online scam centers. OFAC has also designated Cambodia-based Garden City Hotel, Koh Kong Resort, and Phnom Penh Hotel for being owned or controlled by Ly.
“Today’s action underscores our commitment 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,” said Acting Under Secretary of the Treasury for Terrorism and Financial Intelligence Bradley T. Smith. “Treasury will continue to shine a light on the criminal networks operating these illicit schemes and those who seek to perpetrate these abuses.”
According to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) and its September 2023 alert, confidence scammers leverage fictitious identities and elaborate narratives to develop trusted relationships and deceive victims into investing in virtual currency or over-the-counter foreign exchange schemes with fraudulent intent. These scams are largely perpetrated by criminal organizations based in Southeast Asia. The FBI Internet Crime Complaint Center (IC3) reported that investment fraud losses rose from $3.31 billion in 2022 to $4.57 billion in 2023, a 38 percent increase.
The frontline scammers in virtual currency confidence schemes are often victims of trafficking themselves, subjected to physical and mental abuse. The Department of State’s Office to Monitor and Combat Trafficking in Persons highlighted abuses in Cambodia's towns O’Smach and Ko Kong in its annual Trafficking in Persons Report (TIP Report). The report noted ongoing corruption and official complicity in trafficking crimes resulting in selective enforcement of laws.
O-Smach Resort, owned by L.Y.P. Group which is controlled by Cambodian senator Ly Yong Phat, has been under investigation for more than two years for systemic human rights abuses. Victims reported being lured with false employment opportunities, having their phones and passports confiscated upon arrival, and being forced into scam operations under threat of violence.
Local authorities have conducted rescue missions at O-Smach Resort freeing victims from various nationalities including Chinese, Indian, Indonesian, Malaysian, Singaporean, Thai, and Vietnamese.
As a result of today’s action by OFAC under Executive Order 13818 all property and interests belonging to the designated persons within U.S. jurisdiction are blocked. Transactions involving these properties are generally prohibited unless authorized by OFAC.
Financial institutions engaging with sanctioned entities may expose themselves to sanctions or enforcement actions. The power of OFAC sanctions includes both designating persons on the SDN List as well as removing them consistent with legal requirements aiming for positive behavioral changes rather than punishment.
For further information on removal from an OFAC list or filing complaints regarding internet crimes visit the respective links provided by OFAC.
