01/04/2020
Have you ever been approached by someone who
has asked you to join a scheme which would
make you rich quickly without much effort?
Be careful, this may be a Pyramid Scheme which
is illegal in Sri Lanka.
You will not only lose your money but could even
face prosecution and the punishment imposed
could include even imprisonment.
The Banking Act No 30 of 1988 was amended by
incorporating the following provision to prevent
the operation of Pyramid Schemes.
“No person shall directly or indirectly initiate,
offer, promote, advertise, conduct, finance,
manage or direct a scheme where benefits earned
by the participants to such a scheme are largely
dependent on
(a) increase in the number of participants
(b) increase in the contributions made by the
participants in the Scheme”
Any person who contravenes the above provision
of the Banking Act is guilty of an offence and on
conviction is liable to a fine not exceeding *Rs.
1,000,000* and/or a term of imprisonment not
exceeding 3 years. Further, if the offence is
committed willfully or knowingly, or with the
knowledge that the act will cause damage or harm
to any other person, the offender will be liable to
rigorous imprisonment for a term not less than 3
years and not more than 5 years and to a fine of
Rs. 2,000,000 or twice the aggregate amount in
Sri Lanka currency revealed or divulged to have
been received from the participants in the
scheme, whichever is higher.
Also, violation of the above provision of the
Banking Act is specified as an “unlawful activity”
under the Prevention of Money Laundering Act
No. 5 of 2006 and the Financial Transactions
Reporting Act No. 6 of 2006. Therefore, any
funds earned by promoting Pyramid Schemes are
liable to seizure and forfeiture, in the event such
funds are used for the offence of Money
Laundering or for financing terrorism.
