Al-Rawi: Finance Bill will root out financial trickery

Attorney General Faris Al-Rawi says the introduction of the Finance (No.2) Bill would deal specifically with fraudulent investments and financial transactions and separate them from legitimate systems of finance. The bill imposes a criminal penalty of $10 million and ten years imprisonment plus an administrative fine of up to $5 million for anyone who operates a prohibited scheme, including Ponzi and pyramid schemes.

During his contribution on a debate in the Lower House on Monday, Al-Rawi said Clause Three would amend the Proceeds of Crime Act and Clause 13 would amend the Securities Act.

He said the amendments would strengthen and broaden the ability of the Financial Action Task Force (FATF) in the use of administrative sanctions which could protect the public who may be swindled out of their money.

Al-Rawi argued that while under the existing Securities Act, fraudsters could use shortfalls in the law's definition of an investment contract to justify their schemes in court, the amendments would close these gaps using case law to tackle criminals.

"Ponzi schemes and pyramid schemes weren't a part of Trindiadian landscape today or last year, they have been around for a while but when you look the fact that these investment, too-good-to-be-true schemes can fall outside of the definition of an investment contract we came up with this particular definition so we can capture two very important aspects of case law.

"If you are investing your own money in a common enterprise with others investing and you're led to expect profit solely from the efforts of others, that is a promoter or third party then you have an investment contract.

"In our definition of a prohibited scheme we are making sure to capture where last incoming money is used to pay for investments that have been put in already.

"In other words if you put in your $3,000 and they promise you $28,000 you don't want to use other peoples $3,000 to come and pay for your $28,000."

Al-Rawi said the amendments of the Proceeds of Crime Act would also seek to raise fines and deal with shortfalls in the legislation and widen the net to deal with white collar crime.