BoZ warns illegal financial lenders

August 9, 2016

KELLY NJOMBO

Lusaka

THE Bank of Zambia (BoZ) has warned companies and individuals against conducting unauthorised provision of financial services by participating in money circulation schemes that are against the law.

The central bank says companies and individuals conducting or participating in illegal money circulation schemes should desist from such activities as this is prohibited under section 127 A of the Banking and Financial Services Act (BFSA).

According to a statement availed to the Daily Mail recently, BoZ has continued to receive reports that companies and individuals not licensed by the bank are receiving monies from unsuspecting members of the public under false pretences.

“BoZ warns against pyramid schemes and unauthorised provision of financial services among the public as it is against the law. In this connection, the central bank wishes to warn the public to refrain from and report any pyramid or money circulation schemes that are operating under the pretence of authentic ‘get rich quick’ schemes to deceive the public,” the statement reads.

The central bank said through the money circulation schemes, the public is lured with promises to earn large profits or cheaper articles on referral basis by the promoters of the fraud schemes.

BoZ said in the classic pyramid scheme, participants attempt to make money solely by recruiting new participants into the programme, and that the fraudsters make it look like a marketing plan of their products.

The central bank said such fraudsters simply use money coming from new recruits to pay off early stage investors and for most of the pyramids schemes, the modus operandi is similar.

“Customers are required to deposit a minimum amount of money and a non-refundable application fee of between K100 and K500. Some schemes promise to pay monthly dividends of up to 20 percent of the principal amount for an agreed period of say 6 months.”

“Others promise to pay monthly in the form of dividends in form of either cash or building materials or agricultural inputs at a given percentage of say 10 percent of the invested amount for 12 months, and at the end of the contract, customers in both schemes are promised to be refunded their initial investments”.

The central bank says any person who is in contravention of sections 17 and 127 A of BFSA conducts unlicensed banking financial services business, and is involved in money circulation scheme, or participates in a money circulation scheme, is liable to a fine not exceeding K100, 000 penalty units, or imprisonment for a term not exceeding 3 years or both