Business scams: SECP suggests formation of anti-fraud authority

Key institutions agree on need for developing a national strategy.

ISLAMABAD: Fraudulent businesses deprive people of their hard-earned money, which necessitates the need for developing an anti-fraud strategy as well as an all-encompassing authority to tackle such practices, says a commissioner of the Securities and Exchange Commission of Pakistan (SECP).

“Effects of fraudulent businesses can be devastating, robbing people of their hard-earned money. Through our collective and sincere efforts, we need to create a society that has zero tolerance for fraudulent businesses,” said SECP Commissioner Tahir Mahmood while speaking at a high-level meeting at the SECP office on Tuesday.

Emphasising the need for establishing an anti-fraud body, he said it could be modelled on the National Fraud Authority of the UK.

In the meeting, representatives of the SECP, State Bank of Pakistan, National Accountability Bureau, Federal Investigation Agency, Financial Monitoring Unit and the federal and provincial police agreed to devise a comprehensive strategy to combat illegal business activities, including Ponzi and pyramid schemes, carried out by companies and unregistered entities.



An SECP executive director made a comprehensive presentation on ‘Combating Fraudulent Businesses Together’, during which he discussed various frauds encountered in the recent past such as illegal money transfer by forex companies, multi-level marketing, illegal deposit taking, prize schemes, etc.

He underlined the need for developing a whistle-blowers’ hotline and a proactive approach. “Spot it—stop it, should be the slogan of this strategy,” he said.

The meeting participants deliberated on ways of preventing illegal business activities, including Ponzi and pyramid schemes. Some said besides amending old laws, there was a need for a new law to deal with fraudulent businesses.

They agreed on sharing of information to identify and prevent business scams as well as identified various areas of common interest, including intelligence sharing and training of investigators.

They suggested media anchors should be made part of the committee and the National Database and Registration Authority (NADRA) should also be involved in this effort.

The SECP will request law enforcing and investigating agencies to nominate focal persons for coordination.

In 2003, the SECP had received many complaints about fraudulent businesses, which prompted it to form a committee comprising representatives of the SECP, State Bank and NAB. Now other stakeholders such as the Federal Investigation Agency (FIA), Financial Monitoring Unit and police have been made part of the initiative.

Published in The Express Tribune, January 9^th, 2013.

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