ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP), Monday, warned the general public against investing in Ponzi and pyramid schemes, multi-level marketing (MLM) and other online schemes, that promise high rates of return. The SECP officials shared enforcement actions with the media at the SECP Headquarters, here on Monday.
The commission has taken a wide range of measures to ensure implementation of the FATF standards in financial sectors, i.e., stockbrokers, Modarabas, insurance companies, corporate sector, and non-profit organisations (NPOs). Under the Amended AML Act 2010, the SECP is the regulatory authority for any reporting entity licensed or regulated by the SECP.
Considering this role, the SECP has taken measures to ensure implementation of the FATF standards in its regulated financial sectors including stockbrokers, the NBFCs, Modarabas, insurers, corporates, and the NPOs. The aim of the SECP’s efforts is to prevent these regulated sectors from being used by money launderers and terrorist financiers.
They informed that in order to simplify, speed up and make enforcement and supervision effective, the SECP has separated the functions of supervision and adjudication, by establishing two centralised autonomous divisions. All the SOPs and processes related to the initiation and conclusion of regulatory enforcement actions were revamped for ensuring independent adjudication and supervision.
The commission to safeguard interests of common public has already initiated winding up proceedings against those companies, allegedly involved in illegal and unauthorised business activities. These companies are reportedly involved in the businesses of leasing of vehicles, properties, home appliances etc, without obtaining prior license from the SECP. Besides these companies were carrying out investment and financing businesses by inducing unsuspecting customers of attractive returns in lieu of their investment.
The SECP officials explained that mere registration of a company does not authorize it to raise deposits from the public. It is reiterated that raising un-authorized deposits from the general public, indulging in referral marketing, MLM, Pyramid and Ponzi schemes are unlawful activities in terms of section 301 of the Companies Act, 2017.
The SECP has made public a list of companies involved in un-authorized business activities such as illegal collection of deposits from investors by making false promises of exceptionally hefty returns.
Officials said, “the general public is hereby expressly advised in their own interest to be careful, not to invest their hard-earned money or indulge in illegal schemes launched by this company, actively being propagated through social media accounts and pages. The same caution may be exercised in case of any other company involved in any illegal deposit taking, unauthorized investment or MLM schemes”.
Copyright Business Recorder, 2021
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