Capitec Bank freezes over 2 000 accounts of suspected MMM clients

BY ASAVELA FEKEMA - MAY 31, 2016

Capitec Bank on Monday moved to freeze over 2 000 bank accounts of individuals that are involved in the alleged pyramid scheme, MMM South Africa.

MMM South Africa is part of the MMM Global, which is linked to convicted Russian fraudster Sergey Mavrodi, who in the 90’s spent years in a Russian jail after allegedly swindling millions of their hard earned monies in one the largest pyramid schemes the world has ever seen.

The bank said that the holders of the accounts have to prove that the activities of MMM SA do not amount to fraud.

Head of Communications at the bank, Charl Nel, told journalists that Capitec Bank uses sophisticated fraud detection that automatically locks MMM accounts.

“Earlier this year, we indicated that our system will automatically freeze suspected MMM accounts,” said Nel.

If clients have proof that the account is not fraudulent than their accounts will be reopened, if the same transaction takes place the accounts will be closed again.

The Chief Executive Officer (CEO) of Capitec Bank, Gerrie Fourie, told the journalists that MMM had a big impact on them and its members.

Fourie has criticised the South African Reserve Bank (SARB) for no acting faster, as they reported on this matter earlier this year.

“When we inform the regulators, it is important that they react much quicker so that certain people can be protected,” said Fourie.

He added that they reported on this matter five months before getting a reply.

MMM South Africa, however, maintains that it is not a pyramid scheme claiming that it is a community where people afford one another financial help.

It was investigated early on by the HAWKS and the National Consumer Commission (NCC), which in April said that it had not yet determined whether MMM is a pyramid scheme or legitimate stokvel.

Thousands of South Africans are believed to be in the scheme and some are reportedly taking Capitec Bank to  court.