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Financial pyramids Printable version

Last update: 20.05.2024

financial pyramids

A financial pyramid is a way of enrichment through attracting new depositors and redistributing the assets, so that one part of participants get money through contributions of others participants. The organizers of present-day financial pyramids disguise their fraudulent schemes in various ways, but they all work based on the same principle, i.e. they get money through involvement of new participants. As soon as there are no people and cash flow stops, the pyramid will collapse.


Types of financial pyramids:

  • Multilevel pyramids. Main mechanism for establishing and operating the structure involve the following: each new participant makes a first contribution which is distributed among members of a pyramid who are on higher levels of hierarchy. In his/her turn, to earn money, a newcomer should invite several people, whose contributions will be distributed in a similar way. This goes on until termination of influx of new members.
  • Marketing-based pyramids. The main mechanism for a scheme implementation is sale of goods/services by a company. In this case, a good is used as a disguise and its price is overestimated. Often, such products are as follows: watches, cosmetics, household chemicals, etc.
  • Pyramids based on the principle of invitations distribution via messengers. The scheme is carried out through online groups in messengers: WhatsApp, Telegram, etc. A group is created and to join it, one is required to make a cash contribution and invite 2 to 4 people to get a reward in the amount of 200% to 400%. The number of invited participants is unlimited. 
  • Participation (membership) in an exclusive club. In this case cruises, vouchers, travels, training in business creation and promotion, marketing, investment, copywriting, as well as training in palmistry, astronomy, improving mental balance, psychology, numerology, symbols, magic, etc. are offered to the participants. One of the mandatory conditions is to attract other people or an entrance fee for a certain period, depending on the programs (from 1-3 to 5-10 years).

Financial pyramid features 

- Active advertising in mass media, online resources, including social media promising high profitability and passive income;

 - A company wants to buy movable or immovable property from customers at an above-market price (by installment for the period from three months or at a minimum interest rate), or on the contrary offers customers to buy movable or immovable property at an above-market price (with a mandatory advance payment);

 - A mandatory requirement is purchase of goods/services for a certain amount and involvement of several additional persons (there are no retail sales);

 - Absence of a license/registration at the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market (hereinafter: ARDFM), including, but not limited to, the implementation of: 

  • banking operations, including deposit sourcing, issuance of loans, execution of transfers and payments, etc.;
  • activities on the securities market;
  • activities on the insurance market;
  • microcredit activities;
  • debt collection activities. 

 - Money is deposited in cash, to a card account of an individual, or to an e-wallet through the terminals of payment institutions;

 - There is no precise definition for the activities of a company, an individual, or a public project (a statement on a unique activity);

 - Availability of preliminary (special) contributions for subsequent participation in the activities of a company or project;

 - A public promise of high profitability, which significantly exceed the level of the market indicator;

 - Guaranteeing of profitability (prohibited on the financial market, except for bank deposits);

 - Use of words and phrases, elements of the brandbook of famous brands in the name, symbols, advertisements.

 - The inability of a company, an individual or a public project to confirm its activities (transfers of attracted funds, information about their placement). Usually, financial pyramids claim that they conduct their activities in areas that are associated with high profitability: oil production, gold mining, construction, microfinance activities, Forex market, securities market. 

Prior to parting with your money, think about who you are giving it to and for what purposes. If you have detected all or several of the above signs in the organization to which you want to entrust your funds, you should check whether that is a financial pyramid or not.

It should be reminded that Article 217 of the Criminal Code of the Republic of Kazakhstan provides for criminal liability for up to three years for establishment of financial (investment) pyramid. The Article 150 of the Administrative Violations Code of the Republic of Kazakhstan provides for an administrative punishment and a fine in the amount of 150 to 600 MCI for production, distribution and placement of advertisements related to the activities of a financial (investment) pyramid.

It should be noted that the list of organizations with signs of unfair activity has been published on the official website of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market, which also includes the organizations for whose actions the ARDFM received complaints from citizens of the Republic of Kazakhstan.

Also, the official website of the Agency of the Republic of Kazakhstan for Financial Monitoring (hereinafter: AFM) has published an expanded list of organizations that are suspected of being financial pyramids, as well as for which court verdicts have already been passed.

If you are offered to become a member of a financial pyramid scheme, you should immediately contact the law-enforcement agencies at your place of residence, Ministry of Internal Affairs and Financial Monitoring Agency.

You can also contact ARDFM, if you have suspicions of illegal activities in the financial market. You can contact the financial regulator through "Financial pyramids and financial fraud" section in "FingramotaOnline" mobile app or by calling the Call Center: 1459 (working hours: weekdays from 9.00 AM to 05.00 PM). You can also read about existing financial fraud schemes and types of financial pyramids on the portal for financial literacy promotion ( in the "Beware of scammers" section.  

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