ECONOMYNEXT – Sri Lanka’s Central Bank will launch a week long awareness programme against pyramid schemes from July 14-18 amid scrupulous people and firms continuing such scams despite actions by the Central Bank.
Officials at the Central Bank said the anti-pyramid scam week is aimed at creating awareness over such illegal financial schemes which are now conducted by registered companies in various formats using the legal loopholes.
Pyramid schemes have become a recurring financial threat in Sri Lanka, often targeting vulnerable populations with promises of quick and high returns.
These scams typically operate under the guise of “investment opportunities,” requiring individuals to recruit new members in order to earn profits.
Over the past two decades, several high-profile pyramid scams—such as those linked to “network marketing” and foreign currency trading—have duped thousands of Sri Lankans out of their savings.
The lack of financial literacy, weak enforcement of regulatory frameworks, and aggressive social media marketing have created fertile ground for such schemes to flourish, especially in rural and economically stressed communities, analysts say.
The impact of these scams has been severe, both economically and socially with many victims having invested their life savings, pawn family assets, or take loans in the hope of making quick money, only to suffer total financial ruin.
Beyond individual loss, pyramid schemes erode trust in formal financial systems and create social tensions, especially when friends and family members are enlisted into the scams.
In regions where economic opportunities are limited, these scams create false hopes, deepening frustration and public anger when they inevitably collapse.
During Sri Lanka’s economic downturn in 2022–2023, the desperation caused by inflation and unemployment made even more people susceptible to fraudulent investment schemes.
To combat the menace, Sri Lanka’s regulatory authorities, including the Central Bank, have issued public warnings and taken legal action against known perpetrators. However, enforcement has been inconsistent, and loopholes remain in identifying and prosecuting financial fraud under existing legislation.
There is an urgent need for stronger consumer protection laws, proactive monitoring of unlicensed financial activities, and a nationwide financial literacy campaign to raise awareness, analysts say. (Colombo/July 08/2025)
