India Puts MLM Legislation On Hold

Arun Jaitley Indian Finance Minister


A proposed Bill to check fraudulent multi-level marketing (MLM) schemes has been put on hold by the Indian government.

The Finance Ministry had started the process to amend Prize Chits and Money Circulation Schemes (Banning) Act, 1978, to check the menace of ponzi schemes which continue to defraud investors of their hard-earned money.

The ministry informed a recent meeting of representatives of Central revenue intelligence and law enforcement agencies that the amendment Bill “has been put on hold for the time being”, official sources said.

It was also informed that an inter-ministerial group (IMG) formed under Additional Secretary, Department of Economic Affairs, is looking into all aspects including the amendment of the Act, they said.

The Finance Ministry had earlier obtained comments from the industry on the amendments to the Act for a framework for regulation of MLM companies, the sources said.

It had also written to Indian embassies and High Commissions of select countries to gather relevant legal and regulatory framework, and industry practises for direct selling and MLM or ponzi schemes, they said.

Sources said a Cabinet note will be prepared for the Bill’s introduction in Parliament after getting IMG’s recommendations and after considering other legal and regulatory issues.

Meanwhile, a new set of Standard Operating Procedures (SOP) is being formulated by the government for central and state law enforcement agencies for probing fraudulent schemes.

The issue of ponzi schemes and ways to check them is regularly being discussed in meetings of Economic Intelligence Council, headed by Finance Minister Arun Jaitley, on intelligence sharing and financial crimes, they said.


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