RBZ & ZRP step in to stop the spread of Pyramid and Ponzi schemes

It seems as though the authorities have now taken aim at the number of Pyramid and Ponzi schemes in Zimbabwe. The Reserve Bank of Zimbabwe (RBZ) and the Zimbabwe Republic Police (ZRP) are now rooting out these operations.

We have reported on these organisations before and how they have spread in these very difficult times. They are praying upon people who are seeking a means to make an investment and make ends meet. They promise returns that they cannot deliver and when the system collapses they leave people in the lurch.

What grounds are the authorities using?

The RBZ and ZRP are going after these operations because they are offering financial services without the required licence. The law specifically referenced is the Banking Act Chapter 24:20, which says the following in section 5:

“Banking business and banking activities not to be conducted except by registered banking institutions
(1) No person, other than a registered banking institution, shall conduct banking business in Zimbabwe.
(2) No registered banking institution shall—
(a) conduct any class of banking business unless it is registered in that class; or
(b) subject to subsection (2) of section seven, engage in any banking activity that is not specified in its registration certificate.”

One such organisation, KWD Digital Marketing, was raided by the RBZ’s Financial Intelligence Unit. KWD was apparently promising people that they would double their investment if they deposited money with them.

The police apprehended 65 potential investors at a KWD meeting they were crowded at for not abiding by COVID-19 public health measures. Employees of KWD were questioned by the police. According to Assistant Commissioner Paul Nyathi, some of these organisations are saying to people that they are registered with the Reserve Bank of Zimbabwe.

The police have now widened the net in search of such organisations and say that they have information on others operating across the country.

These operations come in many different forms but the formula is the same. Last week the RBZ warned people about these organisations in a statement that read:

“These are fraudulent investment schemes under which existing investors are paid returns, not from genuine market investment of their funds, but from contributions made by new investors, until a point when the scheme can no longer attract new investors and collapses.”