Fraudulent multi level marketing (MLM) companies in India have been working for long. They have been successful till now in duping innocent victims in India. Now Indian government has decided to take these MLM companies seriously.
Previously it was declared that serious fraud investigation office (SFIO) of India would get more powers. This was done as the IT and cyber frauds in Indian companies are increasing at an alarming rate. With an increase in ATM frauds in India, the preventive measures for ATM frauds in India must also be developed.
The global consensus in this regard is shifting towards use of technology to fight cross border crimes and cyber crimes. The use of technology to fight drugs, human trafficking and illicit networks has already been proposed be few thought it outcome is yet to be seen.
Regarding MLM companies the Indian government has decided to block their websites and tracking their online transactions. The Corporate Affairs Ministry, Serious Fraud Investigation Office (SFIO), Department of Information Technology and Central Economic Intelligence Bureau (CEIB) would identify suspect websites and transactions and take strict legal action against them.
As per sources, there are numerous MLM companies doing business in India through websites and many such entities do not have a registered office within India. Therefore, in order to prevent funds being transferred outside India, the website of major establishments doing MLM business need to be stopped through gateways by Indian government.
The payments of such companies may be blocked in India. For multi-level marketing websites operating clandestinely and conducting hidden transactions, the Financial Intelligence Unit (FIU) under Finance Ministry would track and supply snoop data on them so that SFIO can take action. Presently, FIU is mandated to generate suspicious transaction reports based on inputs provided by banks and other financial and economic bodies.
Indian government is contemplating addition of an enabling provision in the Companies Act, 1956 to initiate legal action of attachment of properties of individual directors of such MLM companies by moving the Company Law Board (CLB) in this regard.