Can MMM Nigeria Ponzi Scheme get any legal backing?

MMM Nigeria

In a surprising move, members of the popular digital Ponzi Scheme MMM Nigeria are seeking legal recognition from the Nigerian government.

MMM Nigeria has left close to 3 million Nigerians agonizing during the festive period by freezing their accounts while giving them assurances of re-opening on the 14th of January 2017.

The MMM community in Abuja, which is coordinating the planned meeting, said it hopes to submit a proposal for the amendment of the Banking and Other Financial Institutions Act (BOFIA) to legalise the operations of the scheme and similar money initiatives in the country.

A purported member of the steering committee of the MMM community, Chief Mike Chukwuma, told New Telegraph Newspaper, that MMM has helped immensely in easing the pains of recession, said instead of discouraging Nigerians from participating in the financial self-help scheme, the government should rather legalise its activities so that it could be monitored and regulated.

Recall that the House of representatives had, in November last year, passed a resolution seeking the abolition of the financial policy and probe of its promoters in the country.

The resolution was sequel to the adoption of a motion moved by Saheed Akinade Fijabi (APC, Oyo) who lamented the widespread acceptance by Nigerians of the unregulated scheme, established in 1989 by three Russian nationals with a promise that participants would make 30 per cent on investment after 30 days.

For the purpose of clarity, MMM Nigeria cannot get legal recognition by merely lobbying the National Assembly to review the BOFIA Act. The appropriate quarters required for getting a legal backing for all financial services activities have been spelt  out by the same Act it is seeking to review.

Without prejudice to its status as a Ponzi Scheme, and should the BOFIA Act get any revision, MMM Nigeria will still need to pass through the requisite regulatory bodies to finally legalised whatever financial activity it is into.

First hurdle before MMM Nigeria is that the SEC and the CBN cannot legalise a Ponzi Scheme no matter how widespread and popular it is.

Just in case these supporters/promoters of MMM Nigeria Community are really serious about legalising what they are doing, then there are some possibilities. First, there must be a change in the ‘business model’ of MMM Nigeria. While this is nearly-impossible, it is a must should they want to have anything to do on the right side of the law.

There are two potential licenses MMM Nigeria can pursue. As a bank, finance house and or an asset management company.

In case they want to run a proper bank, The scheme will have to register as a limited liability company with the Coporate Affairs Commission, CAC. Then, MMM Nigeria would need to either register as a commercial bank with the CBN with necessary processes and documentations done. The CBN will require a proper board of directors whose profile and personal information will be vetted by the CBN. MMM Nigeria will have to chose from various tiers of banking licences- community bank, regional bank, national bank and an international banking licenses.

Should in case it ends up getting a banking license, MMM Nigeria will not be allowed to promise its members any bogus interests on their savings in line with the benchmark interest rate set by the CBN Monetary Policy Committee.

As against the mantra ‘no central account’ touted by the scheme, this will not be condoned as a MMM  Nigeria will be required to take proper deposits by opening accounts for its members. It will also be required by law to provide loans to individuals and organisations should they have good credit score and collateral to back it up.

As opposed to its mantra of free system where its owners and promoters are not responsible to any supervisory authority, MMM Nigeria will be required to provide its quarterly and annual financial result to the Financial reporting council of Nigeria, the CBN and other agencies that are required by law to do so.

There will be no hide and seek game. MMM Nigeria will have a corporate headquarters with an open address. The CBN and other regulators must be able to visit the office at any time with or without prior notice.

Other registration can be an asset management company (a company that invests its clients’ pooled funds into securities that match declared financial objectives) or a finance house (a company concerned primarily with providing money, e.g. for hire-purchase transactions.) To register as either of these two companies, MMM Nigeria will require the authorisation of the Securities and Exchange Commission, SEC and the CBN and other relevant financial regulatory agencies.

MMM Nigeria will be under the watchful eyes of the SEC and all its activities will be properly scrutinised to ensure it is not ripping off people with bogus investment schemes.

After all said and done, it will be a miracle of the 21st Century for Sergey Mavrodi, the founder of MMM Global (and by extension MMM Nigeria) to eat the humble pie and carry out proper financial services. The possibility of getting a pass mark with the Nigerian authorities are also slim. He has been convicted and jailed for fraud in Russia, his country of origin, a serious dent that cannot be overlooked by law.

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