BUUMBA CHIMBULU writes
GETTING involved in a money circulation scheme is a risky venture because there is no guarantee that all recruited members will get back their investments, Bankers Association of Zambia (BAZ) has warned.
According to the Banking and Financial Services Act (BFSA) No. 7 of 2017, a ‘money circulation scheme’ means a plan, arrangement, agreement or understanding between two or more persons that involves the pooling and distribution of funds by recruitment of subscribers.
Any person or institution that conducts or participates in a money circulation scheme commits an offence and shall be liable upon conviction to an administrative penalty.
This is according to Precious Kaela-Kalusha, BAZ Research and Communications Officer.
Ms Kaela-Kalusha said every person who had been a member of any form of a money circulation scheme has a story to tell.
She indicated that others had gone away happy because they were paid out while others have been unfortunate because they woke up and the system which was being used to collect investments was no longer in existence.
In her write-up on the Money Circulation Scheme, Ms Kaela-Kalusha warned the public to be careful with such ventures.
“A money circulation scheme is an open group with an unlimited number of members and the recruitment of members is continuous for an unspecified period while a savings or investment group is a closed user group and has a limited number of members with a defined period of a cycle usually between six to 12 months,” she said.
With a money circulation scheme, she said, members were enrolled by a third party who also collected and distributed pay outs while with savings or investment groups the affairs of the group were overseen by the members of the group with the help of a management or administrative team.
Ms Kaela-Kalusha said members of a money circulation scheme often did not know each other while members of a savings or investment group were usually drawn from among friends, workmates, a church, or community.
“In a money circulation scheme, members are promised high returns in a short period of time. These returns are dependent on payments from the new recruited members.
“However, savings and investment groups gain interest on the loans given to other members of the same group and from group business or investments,” she said.
BUUMBA CHIMBULU writes