The number of organisations being investigated for operating as get-rich-quick-schemes is once again on the rise.
The annual report of the South African Reserve Bank's (SARB) bank supervision department released yesterday showed that the total number of organisations under review for operating as illegal deposit-takers - also known as pyramid schemes - rose to 41 in 2015 compared to 25 in 2013.
The regulator has closed down 71 schemes since 2011.
Also read: Pyramid scheme recruits in god's name
Speaking at the release of the report in Johannesburg yesterday, SARB deputy governor Kuben Naidoo said the bank supervision department's lack of capacity resulted in it being reactive rather than proactive in tackling pyramid schemes.
"Our job is to supervise banks . when somebody applies for a banking licence we supervise them.
"A banking licence allows you to take in deposits and sometimes we come across people who pretend to be banks and have a banking licence or who take in deposits illegally.
"We do not have the capacity to be out there in the field to look at every person who claims to be a bank or an investment destination that is taking deposits."
Naidoo said that once a pyramid scheme was shut down, participants would generally get 20% of their investment.
"In the next three years we would be spending a fair bit of money to try to educate South Africans about illegal deposit-taking schemes, 419 scams, pyramid schemes and Ponzi schemes to try to minimise the chances that people would invest or deposit their money in illegal schemes.
"Once a scheme is resolved, which can take many years, it falls off the list and new ones would come on. The number could go down. because we have resolved the schemes or it could go up . because there are new schemes that have come on.
"[The increase in the number of schemes] is not really a reflection of performance.
"Some schemes involve hundreds of millions of rands and can take between three to five years to resolve."
The outgoing registrar of banks René van Wyk said there could be a collective strategy to warn the public about get-rich-quick schemes.
"It is amazing how gullible people are and how gullible they remain to be."
He said pursuing get-rich-quick schemes required law enforcement authorities to do everything by the book.
"If you go in there not having followed the right process, the courts can decide against you and the reason I stress the need for speed is that by the time we get to close it down, investors' money is already gone.
"There are very few schemes that we have finalised that resulted in big dividends going to the investors," said Van Wyk.
Why pyramid schemes are on the rise
The number of organisations being investigated for operating as get-rich-quick-schemes is once again on the rise.
The annual report of the South African Reserve Bank's (SARB) bank supervision department released yesterday showed that the total number of organisations under review for operating as illegal deposit-takers - also known as pyramid schemes - rose to 41 in 2015 compared to 25 in 2013.
The regulator has closed down 71 schemes since 2011.
Also read: Pyramid scheme recruits in god's name
Speaking at the release of the report in Johannesburg yesterday, SARB deputy governor Kuben Naidoo said the bank supervision department's lack of capacity resulted in it being reactive rather than proactive in tackling pyramid schemes.
"Our job is to supervise banks . when somebody applies for a banking licence we supervise them.
"A banking licence allows you to take in deposits and sometimes we come across people who pretend to be banks and have a banking licence or who take in deposits illegally.
"We do not have the capacity to be out there in the field to look at every person who claims to be a bank or an investment destination that is taking deposits."
Naidoo said that once a pyramid scheme was shut down, participants would generally get 20% of their investment.
"In the next three years we would be spending a fair bit of money to try to educate South Africans about illegal deposit-taking schemes, 419 scams, pyramid schemes and Ponzi schemes to try to minimise the chances that people would invest or deposit their money in illegal schemes.
"Once a scheme is resolved, which can take many years, it falls off the list and new ones would come on. The number could go down. because we have resolved the schemes or it could go up . because there are new schemes that have come on.
"[The increase in the number of schemes] is not really a reflection of performance.
"Some schemes involve hundreds of millions of rands and can take between three to five years to resolve."
The outgoing registrar of banks René van Wyk said there could be a collective strategy to warn the public about get-rich-quick schemes.
"It is amazing how gullible people are and how gullible they remain to be."
He said pursuing get-rich-quick schemes required law enforcement authorities to do everything by the book.
"If you go in there not having followed the right process, the courts can decide against you and the reason I stress the need for speed is that by the time we get to close it down, investors' money is already gone.
"There are very few schemes that we have finalised that resulted in big dividends going to the investors," said Van Wyk.
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