Govt looks overseas for laws to fix Ponzi schemes

  • Sanjib Kr Baruah, Hindustan Times
  • Updated: Apr 21, 2015 01:18 IST

From Saradha to Rose Valley and the Pearl scam, with a slew of ponzi-like financial frauds rocking the country in recent years, the government is also looking for solutions abroad.

Top government sources said that the finance ministry’s department of financial services (DFS) has obtained information about industry and regulatory practices from around the world in order to amend laws relating to ponzi-like, multi-level marketing pyramid schemes.

“A request had been sent to all the embassies and high commissions of India to gather all relevant information about legal and regulatory framework and industry practices for direct selling, multi-level marketing and pyramid marketing schemes in select countries,” an official document from a recent meeting said.

“Some of the inputs received from the Indian missions abroad are being incorporated in the proposed Prize Chits and Money Circulation Schemes (Banning) Act that is being finalised in the DFS in consultation with all the stakeholders,” the sources added.

Lack of coordination among the various agencies combating financial crime in India has been an issue of serious concern. HT had earlier reported that in the Saradha scam, for more than a year, various state governments, income tax sleuths, the Intelligence Bureau and other agencies sat on suspicious transaction tip-offs reported by banks to the finance ministry before the lid blew off.

At another meeting chaired by junior finance minister Jayant Sinha and attended by top officials of enforcement, investigative and intelligence agencies, the Australian model of detecting and curbing the unauthorised deposit and money collection schemes was singled out for praise.

In the meeting it was pointed out that, “Australia has a very good model called Fusion that brought various agencies together to detect and prevent such types of schemes.”

Implemented by the Australian Crime Commission since July 2010, ‘Fusion’ capability provides for an information and intelligence sharing centre that brings together over 20 agencies to build the intelligence picture to respond to serious and organised criminal threats including investment frauds.

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