Johannesburg - The Reserve Bank is investigating 19 new suspected illegal deposit-taking schemes after last year investigating 41 similar schemes, 28 of which were carried over from previous years.
This was disclosed by the Reserve Bank yesterday when the central bank launched a new initiative aimed at tackling the scourge of illegal deposit-taking schemes in South Africa, including 419 scams, pyramid and Ponzi schemes and other related illegal schemes.
The initiative has been launched against the backdrop of more than 5 000 advance-fee scams being reported to the Reserve Bank in the past five years.
Lesetja Kganyago, the governor of the Reserve Bank, said at the launch of the initiative these unregulated activities not only affected the financial integrity of the country’s financial system but were also incredibly dangerous because they usually targeted the vulnerable sections of society, which was unacceptable.
“We need to ensure the hard-earned money of South Africans is kept safe and ordinary people are able to increase their savings through legitimate and appropriately regulated savings and investment products,” he said.
Kganyago said one of the objectives of the campaign was to educate citizens about the prevalence of these unlawful schemes and help to empower them to identify and avoid such schemes and scams before it was too late.
Illegal
The campaign would also clarify the role of the Reserve Bank in regard to illegal deposit-taking activities, he said.
Kganyago said the campaign, themed “Easy Come, Easy Go”, aimed to give South Africans practical tips to check if they were being scammed.
It would also encourage the public to exercise extra caution when choosing potential investment opportunities by remembering to “stop, check, and report”, which drew on the old adage that if a deal seemed too good to be true, it probably was.
The campaign would use radio, billboards, community activations, social media and online platforms to spread its message.
Kganyago said the focus of the campaign was to effect behavioural change by encouraging citizens to make investment decisions logically and not emotionally and to encourage a culture of hard work as opposed to the accumulation of quick riches.
“This kind of cultural shift will not happen overnight and so we plan to take the campaign through a phased journey. In the end we hope to facilitate a culture of wise investing that will improve the lives of people,” he said.
Endorsing
Eckhard Volker, the managing director of Integrated Forensic Accounting Services, who has investigated many scams totalling billions of rand and was endorsing the campaign, stressed that there was no such thing as money for nothing and people were guaranteed to lose all their money if they invested in these illegal schemes.
Volker said there was a subtle difference between a pyramid and Ponzi scheme.
The pyramid scheme actively relied on a person to continuously recruit additional people and there was recognition that they would continue to get money as long as new people were recruited.
However, a Ponzi scheme was a misrepresentation to invest in an alleged business where people were promised a massive return, with a 30 percent to 40 percent a month return not uncommon, but it did not have profits at all with the money paid out of the inflow of new investments.
“The bottom line is that everyone will lose. It’s a mathematical assurance. It’s guaranteed that the bubble will burst and everyone will lose.”
BUSINESS REPORT