A wonder bank which promised South Africans fantastic returns has run into trouble after fleecing unsuspecting members of the public.

There were more domestic banks with accounts linked to the alleged MMM Ponzi scheme, suggesting that the scheme could have been more widespread than was originally thought, the National Consumer Commission of South Africa said on Tuesday.
Previously, Capitec Bank said it had closed 2,000 accounts linked to the scheme, which promised participants returns as high as 30% each month.
A portion of the scheme, named the Republic of Bitcoin, was closed down by its founders after it failed to pay out monthly returns of 100%.
Consumer commission spokesman Trevor Hattingh said complaints passed on to the regulator showed the scheme’s participants also transacted through accounts held at other banks.
The Hawks are investigating the scheme after the commission referred complaints against the scheme to them. Although the Reserve Bank usually deals with alleged Ponzi schemes because they took monetary deposits from the public without first registering as a bank, it referred complaints to the commission last year, saying these did not fall within its ambit.
On Tuesday, SA’s four largest banks did not have much to say, however, Ebrahim Jadwat, head of credit risk-monitoring at Nedbank, said it had identified accounts linked to the scheme, but the volumes were insignificant.
“Processes were put in place some time ago to prevent such accounts from being opened,” he said. “Existing accounts are being managed appropriately on an individual basis.”
Barclays Africa said it did not comment on specific account activity, citing client confidentiality. FNB also said the same thing, but added it complied with all laws. Standard Bank had not responded at the time of publication.
Capitec communications head, Charl Nel said its fraud-detection system automatically soft-freezes suspected MMM accounts, or any other account exhibiting potentially fraudulent actions.
The system had started detecting transactions from MMM participants as early as January.
Nel said to regain access to the bank account, a Capitec client would have to make a statement at a police station, testifying to the origin of the funds, and declaring that they were not linked to any illegal activity.
“He must then bring this declaration to the branch along with proof of ID and residence,” said Nel. “If similar activity is picked up by the system again, the account will be soft-locked again, and then the client will need to repeat the process to get the soft lock lifted.” There were more domestic banks with accounts linked to the alleged MMM Ponzi scheme, suggesting that the scheme could have been more widespread than was originally thought, the National Consumer Commission said on Tuesday.
•BusinessDAY South Africa.

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