Higher than the law
Practically all known financial schemes will continue to safely exist even after adoption of the law on financial pyramids, Tetiana Pysmenna argues in her KW article.
The bill On Prohibition of Financial Pyramids in Ukraine, which has for long been a topic of heated discussion in society, has finally been introduced in the parliament (No. 2700). The bill sponsored by the National Financial Services Market Regulatory Commission was to protect citizens from fraudsters operating on the financial market, whose number increased tremendously over the past few years, as people estimatedly lost US $350-400 mn to swindlers..
However, experts doubt that the novelty will tie the hands of the swindlers since is does not contain an exhaustive list of operations that can be construed as “financial pyramids.” “Structures such as MMM that would openly admitted being financial pyramids will become a thing of the past,” says Ihor Fedorenko, a lawyer and partner at the AVER LES law firm.
The bill will be powerless against modern-day pyramids. For instance, it will not help draw into account organizers of online financial pyramids that only exist virtually like the so called MMM 2011. “The latest creation of Mavrodi is based on electronic money, not registered legally anywhere; the funds of its “depositors” are not transferred into ownership of the organizers, but are kept on their personal accounts or accounts of intermediaries. In this way, MMM 2011 circumvents practically all clauses of the new bill and is not categorized as a criminal activity. However, even in case of investigation of such schemes it is practically impossible to legally prove the amount of the fraud,” says Olha Dykhtyarenko, a lawyer at Alekseyev, Boyarchukov & Partners law firm. The devil, as always, hides in details, some of which investigates the article by Pysmenna.