Column by Maxim Builov on the fight against financial pyramids

A bill has been submitted to the State Duma, which, according to the authors, should protect citizens from financial pyramids. According to the explanatory note to the draft law, the problem is that now the lack of status of a financial organization is not a limitation for carrying out activities to attract funds or other property of citizens. Therefore, the document proposes to allow such activities only to financial organizations supervised by the Central Bank, as well as issuers of securities.

The fight against financial pyramids in our country is a noble cause, and its importance is clear to everyone who lived in the 1990s. Therefore, the maxim from the explanatory note that the activities of financial pyramids “can lead to the loss of funds of a significant part of the population, and also undermines citizens’ trust in financial instruments…” does not raise any questions. However, the justifications given there are weakly consistent with it.

Thus, from January 2018 to November 2022, the Central Bank received “more than 6 thousand applications from citizens with complaints about the activities of companies with signs of a financial pyramid,” and taking into account collective complaints – more than 8 thousand people. In 2015–2022, the regulator discovered 3.5 thousand organizations and Internet projects that had signs of a financial pyramid. Even if we take data from the same note on the number of victims per 100 thousand citizens, it still turns out to be less than 30 people per pyramid.

In addition, the explanatory note states that “there is a tendency towards an increase in the number of financial pyramids created without the formation of a legal entity and existing in the form of so-called Internet projects.” In this case, it remains unclear who the new law is aimed at – scammers, who are already aware that they are engaged in illegal business, have even stopped creating a legal entity to organize their pyramids.

Meanwhile, any legal entity can issue, for example, a bill of exchange and collect money from citizens on an absolutely legal basis. Not to mention the fact that domestic “pyramid builders” have traditionally been brilliantly able to bypass any legislative barriers. Suffice it to recall the history of JSC MMM – when it was prohibited from issuing shares, the company began issuing tickets, and the money received was registered as voluntary donations. Strictly according to the law.

As a result, figuring out how the new law can help citizens or hinder scammers, frankly speaking, lacks imagination. But this document may be very useful for the Bank of Russia. After all, pyramids immediately disappear from the mega-regulator’s area of ​​responsibility and become the responsibility of the Ministry of Internal Affairs. Strictly speaking, that’s where they belong. But the question is to what extent the security forces have the skills to identify and investigate intricate financial schemes.