Uganda’s finance ministry has again issued a warning about cryptocurrency investments due to concerns over the growth of Ponzi and pyramid schemes. Government plans new sanctions for crypto Ponzi scammers in Uganda. Local sources say the government is updating the Penal Code Act to ban such frauds.
06 February, 2020 | AtoZ Markets – Uganda’s Finance Minister David Votti spoke with Uganda’s parliament. He asked the government to issue a general warning to Ugandan investors about the risks of investing in cryptocurrency and Ponzi schemes. David Bhatti told parliament that the government had formed an Expert National Task Force on the Fourth Industrial Revolution to explore the cryptocurrency problem. The group was initially established in March 2019 for the analysis of the blockchain, cryptocurrency, AI and 3D printing projects, etc.
Bahati says advertisements will be announced to prevent people from crypto Ponzi scammers in Uganda. He said:
“The task force will also consider global trends centred on the growth and aspirations of Uganda and East Africa. We are also in talks with the Internal Affairs Ministry to ban these schemes. The challenge is that the operators of these schemes are registered as financial institutions, but when they reach the ground, their activities are different.”
Uganda Cryptocurrency Ponzi and Pyramid Schemes
According to Bahati, the problem facing Uganda with the Ponzi schemes is that the companies involved are often registered as legitimate financial assets. Then, the company change course and provide fraudulent services. Ponzi schemes provide high returns and generally pay money in advance to the investor.
Another obstacle to fighting the Ponzi schemes is that government members often participate in these crypto schemes. Mana Mona Mabaka, who came up with a motion in 2018 to stop these schemes, accused the government of protecting business people.
“The Financial Intelligence Authority provided a list of all entities involved in this fraudulent activity; the finance ministry recognizes them but is silent. I know a bishop involved in this activity and is under great supervision.”
Bahati also encouraged the government to provide literacy training for investors in Uganda. So, they could learn about legitimate investment opportunities in recognizing the scams. Parliament Speaker Rebecca Kadaga asked Finance Minister Bahati to explain the government’s efforts to tackle cryptocurrency Ponzi and pyramid schemes.
Bhatti first explained that the Ministry of Justice and Constitutional Affairs had asked to expedite new laws by criminalizing these fraudulent investment projects. Also, the Uganda Registry Service Office is the agency responsible for registering a new business. The agency will adopt a new policy at the time of registration. It will determine who is the actual owner of the work.
Uganda Crypto Sanctions as Penal Code Act
The Ministry of Justice and Constitutional Affairs was in the process of doing amendments to the Penal Code Act. The act would criminalize the Ponzi and Pyramid schemes. Moreover, the Uganda Registry Service Office would soon adopt clear guidelines for determining ownership of companies during registration. He said:
“The second Schedule of Money Laundering Act 2013 also amend. It includes virtual assets providers in the list of the responsible person. It will bring virtual assets service providers under the purview of the Financial Intelligence Authority.”
The Bank of Uganda and the Ministry of Finance will also educate Uganda about the risks of Ponzi and Pyramid investments. They will also indicate legitimate investment opportunities for investors to generate income.
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