The group from Norway, the Netherlands and India were frequent visitors to Phuket - they stayed for a week at the end of last year, another week in March, and arrived back on Phuket on April 28 for their third visit.
''A local in Karon saw them spending a lot of time around an ATM machine and became suspicious enough to contact police,'' a senior officer told the media yesterday.
When police arrested the five men, a total of 700,000 baht in cash was found.
''We believe they may have a connection with other groups who travel frequently to other tourist destinations in Thailand,'' the police officer said.
Karon police have named those arrested as Vinothan Thiy Agarasa, 29, Netherlands, Gnanapooranan Ratnasabapathy,51, Norway, Hussain Qasim, 31, Norway,Qaiser Abbas Shah, 20, Norway and Nesaruban Arunachalam, 28, from India.
The group arrived on Phuket on April 28 and allowed the resort where they were staying to hold their passports, promising they would return two or three days later with enough cash to pay for their rooms.
Officers warned resort managers to be suspicious of others who asked to make that kind of arrangement.
Three of the men are understood to have confessed with the other two denying their guilt.