Bujumbura, Jan. 20, 2021 The Central Bank of Burundi on Wednesday alerted the public to the existence of new investment activities and marketing of cash or electronic money “in fraudulent pyramid schemes”, holding out the prospect of high short-term returns to members.
The Bank of the Republic of Burundi (BRB) said that third parties and agents of large local cell phone companies are involved in this new business “which penalizes especially the latest members”.
The collection of deposits from the public is disguised as “tontines”, while they are fraudulent pyramid schemes, the statement said.
In practice, swindlers set the amount to be paid to new members who, in turn, are paid according to the number of people recruited.
As soon as there are no new investors recruited to generate enough capital to pay the “alleged dividends”, the promoters end up running away, with other people’s money.
The central bank still reports the existence of fraudulent practices attributable to so-called “Ponzi” companies.
These companies have specialized in fraudulent financial arrangements, which consist of remunerating clients’ investments mainly with funds provided by new entrants.
Ponzi” companies generally operate on online platforms, using virtual currencies or “criptomoneys” which are “volatile and illegal”.
The BRB reminds the public that all these practices are illegal, “without any authorization from the competent authorities”.
Practitioners, for their part, expose themselves to “criminal, legal and regulatory” sanctions by exercising “financial intermediation activities without prior authorization from the BRB”.
The public is required to exercise caution by ensuring that investment transactions are carried out with duly authorized depository financial institutions.