Fraudsters’ attacks: the number of financial pyramids in Russia has increased 4 times

The Central Bank reports a significant increase in the number of illegal entrepreneurs and organizations in the Russian financial market in 2021.  During the year, the regulator identified 2,679 such entities, including 871, the activities of which had signs of financial pyramids.  Compared to 2020, the total number of fraudsters increased by 73%.

According to the Izvestia newspaper, referring to the message received by the Central Bank of the Russian Federation, the number of identified financial pyramids has increased fourfold.  At the same time, fraudsters involving citizens in illegal financial schemes often tempted victims with promises of ‘investment attractiveness’ and ‘advisory assistance’.

The majority of the financial pyramids (over 80%) have long moved to the Internet, where a variety of advertisements and recommendations from the well-known bloggers turn out to be a kind of ‘traps’ for fraud victims.  Very often, attackers use the names of popular brands to attract attention.

Among the identified forms of conducting financial transactions, the first place (860 entities) is occupied by firms illegally operating in the securities market.

As a rule, the victims of the scheme are informed that the entity has already received a license from the regulator of another state, which in fact turns out to be a hoax.  A significant part of the ‘companies’ offer to use the services of forex dealers.

The popularity of microfinance institutions (MFIs) has led to the fact that in 2021, there were 948 individuals engaged in illegal lending operations. 355 firms in bad faith indicated microfinance activities in their names.  Many posted ‘fake’ licenses of the Central Bank of the Russian Federation on their websites. About 60 companies actually issued loans, disguising their activities as a leaseback.

A significant number of fraudsters identified by the Central Bank of the Russian Federation either uses cryptocurrency assets directly in their activities, or, without actually having them, mentions this in their advertising.

Inexperienced citizens, begin to believe organizations that offer to ‘mine crypto’ through mobile devices, due to a lack of financial literacy.

 Central Bank explains such an increase in the number of illegal participants in the financial market by the growing popularity of Internet services and social networks among the country's population.  Many pyramid schemes have adopted new technologies, optimizing and reducing the cost of old fraud schemes.  In addition, there has been an improvement in monitoring technologies on the part of the regulator itself.  Since December 2021, it has become possible to block the Internet resources of such persons more quickly.