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Central Bank Warns On Unauthorised Intermediaries

Tax-news.com

15 November 1999


The Irish Central Bank has issued a warning to investors to be careful of unauthorised investment intermediaries. The Bank has been surprised by how easily some offshore companies have been able to extract large amounts of money (in some cases six figures) from people by "cold calling' with promises of highly unlikely returns of up to 75 per cent in a week. Cold calling is not permitted to authorised investment firms.

Most of the schemes offered involve complex and apparently lucrative share or foreign exchange dealings, inviting individuals in one jurisdiction to invest in shares from another jurisdiction, by sending money to a third jurisdiction. They are usually set up through offshore jurisdictions and close after operating for only a short period, making them difficult to monitor and regulate. The individuals behind the companies then move onto new schemes (set up in the same or other jurisdictions) often taking their client lists with them.

The Central Bank said it has noticed a trend of unauthorised companies going back to individuals who have previously made unsuccessful investments with new schemes to encourage them to spend more money to recoup their losses on the original scheme.

Since the Central Bank was given the right in 1998 to print notices warning the public about unauthorised firms about 35 such notices have been issued in Ireland.

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