Trinidad and Tobago nationals are being warned against participating in ventures commonly referred to as “pyramid schemes”.
“These schemes are currently being heavily marketed to nationals through online chat groups, via virtual meeting platforms and by direct face-to-face contact. Pyramid schemes may take many forms and are often falsely presented as new investments including different types of securities, foreign currency trades and even traditional “sou-sou” (meeting turn) arrangements,” the Financial System Regulatory Authorities, the Trinidad and Tobago Securities and Exchange Commission (TTSEC), the Financial Intelligence Unit of Trinidad and Tobago (FIU) and the Central Bank of Trinidad and Tobago (CBTT) said in a joint statement.
They warned that these schemes require persons to join groups and make an initial contribution of money with the promise of a significant pay-out or “return” on their contribution at a later date.
“They rely on the recruitment of new members in order to ensure high pay-outs – this is very different from “sou-sou ”arrangements for example, which do not require recruitment of new members and are not profit-making ventures,” they said.
The financial institutions said that early contributors to the scheme are paid from the money contributed by newer members and that existing members are encouraged to recruit new persons so that they can move to a different “level” or “circle” which promises higher returns on their contribution.
“The overall intention is to get to the “highest level” or to the top of the pyramid which will produce the highest pay-outs, while the newest members, those at the bottom of the pyramid, receive the lowest returns on their contributions. When fewer or no new members join the scheme, it collapses and disappears along with the payment platform and the money that was ‘invested,” they warned.
They said that schemes outside of regulated financial facilities, such as pyramid schemes, promising exorbitant cash pay-outs pose a serious risk to those participating including loss of their hard- earned money.
“In addition, recipients of these funds may not be able to determine its true origins, which may be from illicit sources. You should therefore avoid pyramid schemes,” the financial institutions regulators and watchdog said, without indicating whether or not there has been an increase in such activities in Trinidad and Tobago.
But they warn that any individual or entity promoting investment opportunities must be registered with the TTSEC and that returning entities should pay special attention to any unusual activity/transaction and if it is suspicious, report to the FIU.
“The Regulatory Authorities are advising the public to remain vigilant and report any fraudulent activity to the Fraud Squad of the Trinidad and Tobago Police Service (TTPS),” they added.