The National Consumer Commission (NCC) has revealed that the number of bank accounts linked to the alleged MMM Ponzi scheme is far higher than previously thought.
In recent months, Capitec bank froze 2,000 accounts linked to MMM. The scheme promises investors monthly returns of up to 30%.
After failing to pay out 100% monthly returns, founders shut down the Republic of Bitcoin portion of MMM.
Complaints submitted to the National Credit Regulator (NCR) revealed that the scheme’s members also operated via accounts opened at other banks, said NCC spokesman Trevor Hattingh.
After the NCC referred complaints against MMM to the Hawks, an investigation into the scheme was launched. Last year, the South African Reserve Bank (Sarb) referred complaints to the NCC. Although Sarb normally handles alleged Ponzi schemes, it reasoned that these complaints did not fall within its ambit.
Although Nedbank had pinpointed accounts linked to MMM, the numbers were negligible, said Nedbank head of credit risk-monitoring Ebrahim Jadwat.
“Processes were put in place some time ago to prevent such accounts from being opened,” he said. “Existing accounts are being managed appropriately on an individual basis.”
An Absa spokesperson said, “Absa takes a zero tolerance approach to any criminal or fraudulent activity.”
Both FNB and Standard Bank declined to comment on their clients’ accounts due to confidentiality.
Capitec’s fraud-detection system soft-freezes accounts suspected to be linked to the scheme, or displaying signs of possible fraud, said Capitec communications head Charl Nel. The system had already identified transactions from MMM members in January.
Suspicious accounts are soft-locked and the account holder then has to make a statement at the police station in order to get it lifted. As part of their statement, they would have to testify to the origin of the funds and declare that they were not related to any illegal activity, said Nel.
“He must then bring this declaration to the branch along with proof of ID and residence,” Nel explained. “If similar activity is picked up by the system again, the account will be soft-locked again, and then the client will need to repeat the process to get the soft lock lifted.”