What US Ambassador Alaina Teplitz warned in 2021 is now playing out in Sri Lanka. Last week, a violent clash between two Chinese gangs in the Chinese‑backed Colombo Port City left one man dead. Investigators are probing possible links to Chinese Triad networks, among the largest criminal syndicates in China, notorious for drug trafficking, illegal gambling, racketeering, human smuggling, and other transnational crimes.

Teplitz had cautioned during discussions on special legislation for the Port City, which many feared could turn the project into a money‑laundering haven. “Unintended consequences could be creating a haven for money launderers and other sorts of nefarious actors to take advantage of what was perceived as a permissive business environment,” she warned.

Later, in an exclusive interview with the Trinco Centre for Strategic Studies, Teplitz reiterated U.S. concerns: “There appear to be openings for corrupt influences and the potential for illicit financing, money laundering, and other activities by nefarious actors. U.S. companies are going to be wary of that.”

While Washington raised alarms, Beijing offered a contrasting narrative. China’s envoy described the Port City and Hambantota Port projects as “dual engines of Sri Lanka’s economic growth.”

 Teplitz countered sharply: “The more important question is, where will these engines take Sri Lanka? The Hambantota port project incurred a tremendous amount of debt, and ultimately Sri Lanka had to lease out the port for the next century. The Colombo Port City could similarly expose the country to suspect economic practices and corruption. Who would benefit from that?”

New Base for Asian Scam Networks?

Sri Lanka is increasingly being identified as a new base for Asia’s scam networks, according to Bloomberg and other media investigations. Reports highlight how the country is fast becoming a hub for transnational cybercrime.

A crackdown in Southeast Asia has forced Chinese‑run criminal networks to relocate their vast scam operations to Colombo. Police spokesperson Fredrick Wootler warned of an “alarming increase in cybercrimes” carried out by individuals who enter the country on tourist visas and then illegally establish scam centers targeting victims worldwide.

Authorities have already conducted more than a dozen raids this year, arresting and deporting nearly 700 foreign nationals. Most of those detained have been Chinese citizens, though suspects from Vietnam, Indonesia, Laos, the Philippines, Malaysia, and Myanmar were also involved.

Global Reach of Chinese Criminal Networks

China‑linked criminal activity is increasingly viewed as a major security threat by Western governments. Investigations show that Triad networks exploit Pacific Island nations and other territories to launder money and run illicit operations with far‑reaching consequences.

The concern is heightened by the Triads’ deep association with the Chinese Communist Party (CCP). The World Hongmen History and Culture Association—presented publicly as a cultural body—has been identified as a Triad front. Its leader, Wan Kuok Koi, better known as “Broken Tooth,” has been tied to Beijing’s United Front strategy. In 2020, the U.S. Treasury sanctioned Wan and related entities, describing them as part of a “powerful business network” engaged in illicit activity across the Asia‑Pacific.

A Washington Post investigation raised vital questions about Wan’s ties to Beijing, noting that he received awards for “patriotism” from CCP entities despite serving a 14‑year prison sentence in China. Martin Thorley of the Global Initiative Against Transnational Organized Crime described this as “extremely compelling evidence” of Beijing’s association with Triad networks. Lt. Col. Richard J. Connaroe II of the U.S. Army echoed the concern, arguing that “Beijing has employed the Hongmen as a covert foreign influence arm of the CCP for more than a decade to execute gray zone activities that violate local laws and national sovereignty.”

Analysts warn that the footprint of Chinese criminal groups has expanded in lockstep with China’s economic and geopolitical presence worldwide. Vanda Felbab‑Brown of the Brookings Institution observed that unlike traditional Triads, which sought territorial control, the Hongmen association operates as a “constellation of business structures.” This model has enabled rapid expansion across parts of the Global South eager for investment, according to researcher Nathan Paul Southern.

Sri Lanka’s Strategic Dilemma

Against this backdrop, Sri Lanka faces a pressing question: how will the nation confront the infiltration of Chinese global criminal networks? Since Mahinda Rajapaksa’s tenure, Chinese presence in Colombo has steadily increased, with Sri Lanka positioned as a partner state in Beijing’s Belt and Road Initiative.

Without a robust security mechanism, Sri Lanka risks becoming a permissive environment for powerful Chinese criminal organizations with strong links to the CCP. The stakes are high: unchecked infiltration could undermine not only Sri Lanka’s economic sovereignty but also regional stability. The central challenge lies in distinguishing genuine business proposals from Triad‑linked investments.

As India—China’s strategic rival—watches closely, Sri Lanka’s balancing act becomes even more complex. The emblematic case of Palau illustrates the risks: in 2019, Wan Kuok Koi was placed on the nation’s “undesirable alien” list after attempting to secure land near two U.S. radar sites. Despite the ban, individuals linked to Wan remain active in Palau and elsewhere in the Pacific, according to the UN Office on Drugs and Crime.

For Sri Lanka, the lesson is clear. When a Chinese company won the contract to establish hybrid wind and solar energy projects on three islands off the northern Jaffna peninsula—just 45 km from Rameswaram in Tamil Nadu—the security implications extended far beyond economics. Against this backdrop, India’s concerns are entirely justifiable. 

The pressing challenge now is how Colombo will determine which actors from China qualify as “undesirable aliens,” and how it will distinguish legitimate investment from covert criminal infiltration.

(The author is Founding Director, Centre for Strategic Studies–Trincomalee (CSST), Sri Lanka, and a geopolitical analyst. The views expressed are personal. He can be contacted at jjathi@gmail.com / director@trincocss.org / www.trincocss.org)