Special unit to crackdown on pyramid schemes

The Central Bank is to revive its now defunct special investigation unit to crackdown on the rising ponzi schemes in the country, according to the country’s Central Bank Governor.

The Central Bank will soon make a formal request in this regard to the Prime Minister, Ranil Wickremesinghe, who is also the Minister in charge of the National Policies and Economic Affairs Ministry, under which the Central Bank is listed.

“We are going to re-establish the special investigation unit,” Dr. Indrajith Coomaraswamy told a news conference early this week.

According to reports, a special investigative unit under the Central Bank was originally set up in 2005 to probe into the Goldquest pyramid scheme. But it was shut down during the administration of President Mahinda Rajapaksa and the tenure of former Central Bank Governor Ajith Nivard Cabraal.

The new unit will need the assistance of the Sri Lanka Police.

In a disturbing turn of events the Central Bank has observed a rising trend in pyramid schemes in the country – a fraudulent act of non-existent enterprise fostered by the payment of quick returns to the first investors from money invested by later investors.

“It appears that ponzi schemes are rising”, Dr. Coomaraswamy added.

The term ‘ponzi’ derives from the Italian born con artist named Charles Ponzi who defrauded tens of thousands dollars from American people through clever money making schemes.

The Central Bank in recent times has been seen bringing in new systems and establishing new processes to tighten the firewalls and closing the loopholes to avert manipulation.

Earlier this week the Central Bank said it was going to set up an enforcement division under the Central Bank to prosecute wrongdoers.