This archive report was first published on 25 August 2020.
Kenya's financial regulators have sounded the alarm on a surge of unlicensed financial services promising unusually high returns, warning the public to be cautious of online pyramid schemes and unregulated forex brokers.
According to a joint statement 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), these entities pose significant risks to the financial sector, including money laundering and financing of terrorism.
“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,” the regulators warned.
Regulators urge citizens to deal with licensed institutions to avoid losing money and instances of fraud. They also call on the public to report parties who engage in unlicensed financial services or forex deals.
Before investing, citizens can verify the authenticity of a financial service by requesting a business permit and a valid license from the concerned regulator. They can also check the Central Bank, Sasra, CMA, IRA, or RBA website to ascertain whether a financial service is regulated.
