Our website has detected that you are using an outdated browser that will prevent you from accessing certain features. An upgrade is recommended to improve you browsing experience.
3
SARB Mandate - Illegal deposit-taking
The SARB, through the Prudential Authority is responsible for the regulation and supervision of registered banks in the Republic of South Africa.
The Banks Act, 1990, however, provides that no person may conduct the “business of a bank” unless such a person is a public company and registered as a bank with the PA
The “business of a bank” is defined in the Banks Act, 1990 and can be described as the soliciting or advertising for, or the acceptance of, deposits from the general public as a regular feature of the business in question.
The PA is afforded certain powers in terms of sections 81 to 84 of the Banks Act, 1990 to control the activities of unregistered persons. These activities are, however, confined to illegal deposit-taking only.
The above-mentioned provisions provide, among other things, that the PA may do the following in respect of unregistered persons that are suspected of taking deposits from the general public in contravention of the Banks Act:
Since the PA neither registers nor supervises unregistered persons, it is generally not aware of such schemes unless it is informed thereof by members of the public. The PA therefore only reacts to complaints received from the general public that contain sufficient details and documentary evidence to justify the PA invoking its powers in terms of the Banks Act.
A Pyramid scheme is one in which you are required to be an active participant. After an initial entry payment has been made, you would be required to recruit other members before earning a return on the original ‘investment’. The more recruits, the greater the return!
Named after the person (Charles Ponzi) who first made these schemes infamous, they are operated by tricksters and sometimes seemingly legitimate businesses that will invite you to invest in a scheme or business. The operator promises you unrealistically large returns on your investment in a short period of time. These schemes depend on enticing a steady flow of investors, whose money goes to pay off promises made to earlier investors. Any such scheme will inevitably collapse, as it is impossible to find enough new investors to keep the scheme going.
The major difference between the schemes is that in Ponzi schemes the investor takes no active part, whereas in a pyramid scheme, active involvement is a requirement.
When choosing a moneymaking opportunity, do your homework thoroughly. Get advice from registered financial advisers; this is available free of charge with no obligation. Take your time, you didn’t save it overnight. Be particularly cautious of ‘opportunities’ that promise to make you wealthy in a very short period. Beware of a ‘secret formula’ that will only be shared with select investors.
Accredited Financial institutions are regulated and supervised, by either the South African Reserve Bank, National Consumer Commission or the Financial Services Board. There are strict rules and controls that govern investments with these institutions whereas, unregulated and unsupervised persons and groups don’t follow these rules and your money is at great risk with them.
Make sure that you only give your money to a company or person that is registered as an accredited financial services provider and a deposit taking institution in terms of the Banks Act. Take the time to check with a respected and registered adviser.
