Tuesday, 06 December 2022
CB refers pyramid scheme probes to CID, AG

CB refers pyramid scheme probes to CID, AG

The Central Bank (CB) after probing five entities dealing in pyramid-like bogus deposit-taking has handed these investigations over to the Criminal Investigation Department (CID), top officials said.

“The CB investigated some multi-level marketing firms that are dealing in pyramid schemes,” a CB official told the Business Times adding the most of these schemes are functioning in the south and are carrying out peculiar business models such as selling furniture, electronics, etc above the market value to customers. He added that there are more than two cases that were sent to the CID. He said that some probes were also sent to the Attorney General for an opinion.

“There were serious issues raised by certain customers on some of these schemes and we referred them to the AG,” he said adding that since the start of this year the CB has got many calls on pyramid type schemes. He said these schemes are frequently disguised to appear as schemes engaged in selling goods or services. “These things are prohibited,” he reiterated.

“A ‘Prohibited Scheme’ (a term used by CB) is a structure where the participants are required to contribute or pay money or monetary value so that the benefits earned by the participants are largely dependent on an increase in the number of participants in the scheme or an increase in the contributions made by the participants in the scheme, as stated in Section 83C (of the Monetary Act),” he said, adding that these schemes require new participants to make an upfront payment to the promoter to join the scheme. He said that CB encourages anyone to come forth with complaints in this regard.

He said that some who complained said that participants were promised future benefits (money or other privileges) that are primarily earned from additional participants recruited, as well as all new participants who are, in turn, brought in by the existing participants.

(By Duruthu Edirimuni Chandrasekera - sundatimes.lk)

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