November 26, 2019
BSP MEMORANDUM NO. M-2019-028
| TO | : | All BSP-Supervised Financial Institutions (BSFIs) |
| SUBJECT | : | Preventive Measures Relevant to Illegal Investment Activities or Schemes |
Illegal investment schemes enticing the public to invest their money have been recently identified by supervisory authorities, such as the Securities and Exchange Commission (SEC). 1 The perpetrators operate by luring prospective investors with high interest/returns or dividends, which are not normally offered by other financial service providers. The prospective investor may invest money or recruit others to do the same. These types of investment schemes include "Ponzi Scheme" wherein a fraudster lures investors with the promise of high returns that are to be generated through the investment or business efforts of the fraudster. Instead of generating actual profits, the fraudster creates the illusion of profits by paying investors returns from their original investment or paying returns from the money that new investors contribute to the fraud. This type of scheme tends to collapse when the number of new investments into the scheme do not satisfy the payment obligations for previous investors....
