Financial regulators in Kenya have today warned the public against investing in fraudulent and unlicensed financial services. A joint notice from the Central Bank (CBK), Capital Markets Authority (CMA), Insurance Regulatory Authority, Retirement Benefits Authority (RBA), State Department of Co-operatives, and The Sacco Societies Regulatory Authority (SASRA) caution the public about the re-emergence of fraudulent entities posing as online global network companies, terming them as pyramid schemes.
“Some of the fraudulent entities have styled themselves as online global networking companies that seek to recruit members of the public to join and make cash deposits purportedly to buy shares in the company. The encouragement to recruit new members to receive more benefits is a characteristic of a fraudulent pyramid scheme,” reads the joint statement.
The caution from financial regulators comes after a surge of unlicensed financial services promising enormous returns upon joining them.
The regulators also warn against unregulated firms posing as online foreign exchange (forex) brokers and traders, saying that the entities are not licenced as brokers by CMA or as forex dealers by CBK.
“These rogue entities seek to exploit Kenyans and pose Money Laundering and Financing of Terrorism risks to the financial sector.”
The financial regulators urge citizens to deal with licenced institutions to avoid losing money and instances of fraud. Further, the notice also calls for the public to report parties who engage in unlicensed financial services or forex deals.
Citizens can verify the authenticity of a financial service by requesting for a business permit and a valid licence from the concerned regulator. Also, one can ascertain whether a financial service is regulated by checking the Central Bank, Sasra, CMA, IRA or RBA website, depending on the nature of the financial service.
READ ALSO: Forex Brokerage Director Charged with Running Unlicensed Business
