Investors of illegal schemes face severe penalties: Bank Negara governor

KUALA LUMPUR: Investors knowingly involved in illegal financial schemes can be punished under the law for abetment and dealing with illegal proceeds, said Bank Negara Malaysia governor Datuk Muhammad Ibrahim.

“Under the Financial Services Act 2013, we can take action against (these investors). We can charge them for abetment of illegal activities, with a maximum penalty of RM50 million and 10 years’ imprisonment. It’s quite severe,” he told a press conference after announcing gross domestic product growth figures for the first quarter of 2017 here on Friday.

Other regulations include laws administered by Bank Negara, the Penal Code, the Interest Schemes Act 2016, the Direct Sales and Anti-Pyramid Scheme Act 1993, as well as, the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.

Muhammad said any number beyond the 3%-7% returns offered by fixed deposits and unit trusts cannot be true and one has to be mindful about such scams. Illegal financial schemes are also a “zero-sum” game, where dividends are paid out from the new investors’ funds.

“When it comes to pyramid schemes, ‘smart people’ know that such scams are illegal but they know they’re at the top tier of the scheme and they jump from one scheme to another, thus benefiting from the profit. This is definitely unacceptable,” he explained.

Muhammad urged the public to stop participating in illegal financial schemes, as this type of business model is never sustainable with no real economic activities generated.

He pointed out that a money scam is likely to burst within 12 months and cannot be sustained for a long time.

“There’s no benefit in participating in these ventures and you will lose your money,” Muhammad warned. - by Ee Ann Nee