How HYIP and prime bank fraud work
HYIP (High-Yield Investment Programs) and prime bank fraud mislead you into believing that certain investments on the international market will allow you to make a lot of money. In reality, these investments and their markets don’t exist. Often, scam artists will remain vague or, conversely, will propose strategies that seem highly sophisticated.
These investments go by many names, including:
- Prime Bank Debentures
- Prime Bank Guarantees
- High-Yield Trading et Roll Programs
- International Chamber of Commerce (ICC) Letters of Credit
- Guaranteed Bank Notes
- Discounted U.S. Treasury Securities
- International Monetary Fund Backed Securities
They tell you for example that:
- Your investments will be entrusted to excellent portfolio managers.
- You will take advantage of a high interest rate.
- You will be able to withdraw investment income whenever you wish.
- You can buy debt securitiesA debt security is a security representing a loan or debt.
Bonds and debentures, which are loans granted by investors to a company, are examples of debt securities. at a discount secured by major banks and resell them at a quick profit.
- You will invest in quality products (securities of the top 100 world banks, medium-term bank notes, letters of credit, tax haven investments, etc.).
The scam artists will try to convince you that:
- Transactions are strictly confidential and investment opportunities of this type are by invitation only. You may be asked to sign non-disclosure agreements. This allows them to ensure that you won’t seek outside advice.
- Your investment is issued, traded, guaranteed or endorsed by the World Bank, the International Monetary Fund (IMF), the Federal Reserve, the Department of the Treasury, etc. This is not true.
- You have access to programs that otherwise would be reserved for top financiers on Wall Street, large pension funds and the wealthy elite. This is also a lie.
- You are required to open a virtual currency account, such as Bitcoin, to “facilitate transactions.” The anonymous nature of virtual currency transactions makes it easier for fraudsters to carry out their schemes.
Scammers may entice you with an opportunity to invest in a tax haven, meaning a jurisdiction in the world where there is little or no income tax. They may tell you that it’s legal but not to let anyone else know or else the laws might be amended to close the “loophole” in the system.
Investing abroad is not illegal. However, it is illegal not to report the income or gains on those investments. A person who is willing to help you skirt the law so you pay less income tax may have no qualms about running away with your money!
Fraudsters didn’t choose the tax haven at random. They chose it because it’s a country where it’s almost impossible for law enforcement agencies to trace the funds.
There are ways for you to avoid these types of frauds.
As for any investment:
- Be cautious if you are guaranteed high, risk-free returns.
- Don't invest if you’re asked to maintain secrecy.
- Ask for advice from a representative authorized by the AMF, request a prospectusA prospectus is a detailed information document that a company must prepare to be able to sell securities (such as shares) to the public.
It must provide full, true and plain disclosure of all material facts likely to affect the value or market price of the security in question. , look for articles in specialized publications, etc.
- Always check whether the person and firm offering you an investment are authorized to do so. When in doubt, contact our Information Centre.