Unlicensed entities scammed people by promises of astronomical interest rates in Maputo

Entidades não licenciadas burlaram pessoas por promessas de juros astronómicos em Maputo

Several people have been swindled in Maputo in schemes involving deposits with promises of high interest rates by unlicensed entities, leading the Bank of Mozambique to express "concern about the proliferation" of these "criminal" businesses.

One of the victims, a civil servant, told Lusa that her savings worth 100,000 meticais "evaporated" when an institution she thought was legal "disappeared" with deposits from dozens of people who put their money there with the promise of exorbitant interest.

"With 100,000 meticais, I was promised interest of 100% in two months, but I was left without the capital and without the interest," he said, speaking anonymously because he now knows that he has been involved in a crime.

The fact that the entity was operating in broad daylight, in offices right in the center of Maputo, led many people to believe that it was an activity licensed by the Mozambican financial regulator.

"That company's premises were always full of people who went there to put their cash in."

A man who also fell prey to the fraudulent deposit scam said that he bet on a term deposit of 20,000 meticais to receive 60,000 meticais in three months, but lost everything because the people who made him that promise disappeared.

"When suspicions began to arise, because the first people who were supposed to receive capital and interest only received interest, the owners of that institution were no longer seen in the office," he said.

Another victim said that dozens of people are looking for a woman who fled with more than a million meticais in deposits, after convincing the victims to hand over the money on the promise of repayment accompanied by large loans.

"What she promised wasn't payment with interest, it was that each person who was part of the business would receive the payments from all the others at once, and then make monthly payments until everyone in the group had received them. It was a 'rotating xitique'," the woman explained, a circular model of deposits and loans, a typical savings model in Mozambique and neighboring countries.

The cases have arisen and led the Bank of Mozambique to issue a statement last week, expressing "concern about the proliferation in the market of entities dedicated to taking deposits from individuals, without being licensed to do so".

The communiqué asks that, before making any deposits, investors or savers consult the list of authorized institutions on the Banco de Moçambique website - in the 'area of activity' section.

At the same time, the regulator has listed 10 signs that should motivate mistrust.

The central bank warned of the usual profile of the scam: "Generally, institutions that act illegally in the financial area adhere to the financial pyramid scheme. They are characterized by the promise of short-term gains, usually in the form of interest on the amounts deposited."

The capital gains promised by these unlicensed institutions are "much higher than the market average and increase as they attract more depositors", he warned.

Banco de Moçambique also pointed out that the promoters use depositors to attract more customers, promising these intermediaries fat commissions: the entry of new people into the scheme makes it appear as if the income for older depositors increases, but then the model becomes unsustainable.

One victim said she was attracted to this type of financial product by the expectation of easy high earnings, far above the interest paid on term deposits at licensed financial institutions and without bureaucracy.

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