The new director of investigations and enforcement at the Financial Sector Conduct Authority (FSCA), Brandon Topham, made it clear last week that he would be taking a tough stance against anyone defrauding South Africans of their hard-earned cash.
He said that he accepted the position because he felt very strongly about the growth of criminal syndicates operating in the financial sector.
“We cannot have a situation where people are driving fancy cars on the back of other’s misfortune,” he said.
The FSCA’s powers have been expanded, making it easier to investigate potential fraud, and the number of staff in the investigation department has been doubled.
Topham says his focus will be on increasing the speed of investigations and on working with the prosecuting authorities to bring criminals to justice.
One of the key changes is that anyone offering financial services or products will fall under the ambit of the FSCA.
Until recently, the powers of the regulator extended only to companies and individuals who were licensed under the Financial Services Board, which meant that when a consumer reported illegal activities of individuals or companies that were not registered, the regulator could not investigate.
Now anyone involved in offering financial services and products can be investigated.
The FSCA also has the power to decide what products and services are considered part of the financial sector.
Topham says they are discussing including cryptocurrencies as financial products, which would allow them to investigate allegations of fraud in this area.
Topham says their powers of investigation will also extend to offshore transactions.
If a South African resident conducts an investment with an offshore platform through the internet and is defrauded, they can lodge a complaint with the FSCA.
While Topham says the chance of recovery is low, the department will liaise with international authorities to shut down illegal operations. Directors of these firms will also be prevented from doing business in South Africa.
The department is taking a more proactive role in identifying scams by monitoring social media and advertisements – for example, those “foreign exchange traders” on Facebook who claim to double your money in a week.
They will also send “mystery shoppers” to courses and seminars where individuals may be selling schemes with the aim of defrauding investors.
While Topham’s enthusiasm is a breath of fresh air and we are already seeing more investigations and warnings coming from the FSCA, the rise in criminal activities will keep them under severe pressure. It also takes years to complete an investigation and prosecute those involved.
Even with these enhanced powers, it will be difficult to recoup money that has been stolen and the focus will be on preventing the fraudster from preying on more victims. Prevention is always better than cure, so be vigilant and don’t fall for promises from get-rich-quick schemes.
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