The South African Reserve Bank (SARB) has warned South Africans to steer clear of any financial schemes that are operating without regulatory oversight, saying money can be lost with little to no hope of it ever being recovered.<\/p>\n
According to the Central Bank, 19 illegal schemes are currently being investigated, left over from a total of 41 that were under review in 2015.<\/p>\n
However, the Bank noted that it is not a prosecuting authority, and thus it can only investigate contraventions of the banking Act and refer matters of concern to the relevant authorities – such as the SAPS or NPA, in cases of criminal activity.<\/p>\n
Several such schemes under investigation by SARB were pushed through for further investigation late last year after receiving complaints from consumers.<\/p>\n
These include\u00a0WorldVentures, Kipi\u00a0(also known as Mydeposit241), Make Believe, NMT Investments, Instant Wealth Club, MMM South Africa, DIPESA, Sikhese (Pty) Ltd as well as the Wealth Creation Club, as previously reported.<\/p>\n
The bank said that the very nature of such schemes means they only get reported when it has become too late to help – but it was encouraged to see that there has been a shift to proactive\u00a0notification and intervention, which has resulted in securing accounts prior\u00a0to money being lost.<\/p>\n
“Generally, illegal schemes are only reported by investors when they fail to receive their promised returns,” SARB said.<\/p>\n
“This typically occurs when the funds have already been depleted and the scheme is on the brink of collapse. As such, the prospects of recovering funds for repayment to investors are limited.”<\/p>\n
The bank said it was concerned about the prevalence of illegal schemes in the
\ncountry – as well as \u00a0the apparent willingness of individuals to participate in such ventures.<\/p>\n
“Members of\u00a0the general public are again cautioned to exercise vigilance and prudence in their investment\u00a0choices,” it said.<\/p>\n
Members of the public don’t care<\/strong><\/p>\n Public backlash to financial institutions “interfering” with their participation in dodgy schemes has been pronounced and vitriolic – with\u00a0some of\u00a0the most vocal being members of MMM South Africa.<\/p>\n MMM South Africa, gained media attention after Capitec Bank started freezing accounts associated with the scheme in early 2016. Accounts were frozen amid apparent fraud concerns.<\/p>\n MMM, which was \u00a0started by convicted Russian fraudster, Sergey Mavrodi,\u00a0guarantees a return of 30% on any fees put into the system \u2013 which is 20% above the repo rate, and one of the key signifiers of a multiplication scheme.<\/p>\n The National Consumer Commission (NCC)\u00a0identified a number of other factors in the scheme that indicates it is a type of pyramid\u00a0scheme – specifically, that is dependent on users recruiting other users,\u00a0while each person is required to pay to join,\u00a0through what the\u00a0platform calls \u201cdonations\u201d.<\/p>\n Read:\u00a0Beware of MMM \u2013 before it\u2019s too late: Consumer Commission<\/a><\/strong><\/p>\n However, MMM members have defended the scheme saying it operates like a stokvel<\/em> –\u00a0and have said in no uncertain terms that the banks and authorities should back off and leave them be.<\/p>\n As is often the case with such schemes, MMM’s structure collapsed in early May as users withdrew funds en mass, forcing the scheme runners to freeze payments.<\/p>\n MMM has since rebooted – starting over\u00a0with the promise to repay frozen funds using new funds being injected into the system; effectively adding old debt to new members.<\/p>\n The scheme is currently under investigation by the Hawks, and members of the public have been warned by the NCC – and now the South African Reserve Bank\u00a0–\u00a0to steer clear.<\/p>\n MMM South Africa collapses \u2013 and starts over<\/a><\/strong><\/p>\n We are not a Ponzi scheme: MMM South Africa<\/a><\/strong><\/p>\n Russian \u2018Ponzi scheme\u2019 MMM Global collapses: report<\/a><\/strong><\/p>\nMore on MMM<\/h3>\n