‘Pakistan needs comprehensive anti-fraud strategy’

ISLAMABAD: Pakistan needs to have a law and a comprehensive anti-fraud strategy for combating illegal business activities, including Ponzi and pyramid schemes carried out by companies and unregistered entities, said officials.

This was the unanimous decision of a meeting of the high-level special committee comprising representatives of the Securities and Exchange Commission of Pakistan (SECP), the State Bank of Pakistan (SBP), National Accountability Bureau (NAB), Federal Investigation Agency (FIA), Financial Monitoring Unit (FMU) and the federal and provincial police.

In addition to amending old laws, there is a need for a new law to deal with fraudulent businesses, they said.

In 2003, the SECP had received several complaints regarding fraudulent businesses and consequently, it formed a committee comprising representatives of the SECP, the State Bank and NAB but now more stakeholders, including FIA, FMU and police have been made part of this initiative.

“In the last two years, the SECP has taken actions against approximately six companies who were involved in fraudulent businesses and their cases are in the court of law. There should be a law to curb these illegal practices and needs close coordination for monitoring such activities,” said Imran Ghaznavi, spokesman for the SECP.

He said that the committee has also agreed to appoint a focal person in these departments who will keep a vigil and work as a “whistle blower” to identify such activities, before they deceive the people. It was decided that the SECP would request various law enforcement and investigation agencies to nominate focal persons for coordination.

“The 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. In order to achieve this objective, we urgently need to have a new anti-fraud strategy,” said Tahir Mahmood, commissioner of the SECP.

The coordination mechanism should be institutionalised by setting up an all-encompassing anti-fraud body such as the National Fraud Authority of the UK, he said, adding that a SECP executive director made a comprehensive presentation on “Combating fraudulent businesses together”.

He also elaborated on various frauds encountered in the recent past such as forex companies, multi-level marketing, illegal deposit taking, prize schemes, etc.

Mahmood emphasised the need to develop a whistle-blowers’ hotline and rapid proactive approach. Spot it — stop it, should be the slogan of this strategy, he said.

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