• Police acknowledges shortcomings 
• Tracing IP addresses problematic 

The Police Department acknowledged several shortcomings when it comes to investigating pyramid schemes including those pertaining to technological infrastructure-related lacuna and technical challenges which in turn play a role in the delay in investigating such cases.

This admission follows after The Daily Morning queried the Police Media Spokesperson, Senior Superintendent of Police Buddhika Manathunga on the Central Bank Governor Dr. Nandalal Weerasinghe recently highlighting that the relevant law enforcement authorities including the Police and the Attorney General's Department are yet to complete any lawsuit with regard to some 20 illegal pyramid schemes which were determined by the Central Bank to have been engaged in illegal activities under the Banking Act. Dr. Weerasinghe had hence called for the shortcomings in the relevant legal framework and the judicial process to be addressed.

The Daily Morning learnt that the said technical challenges include tracking down Internet Provider (IP) addresses as well as obtaining reports that come from foreign countries. “Many of these pyramid schemes that operate in our country involve a person or an entity that operates from a foreign country,” Manathunga noted, adding further that while it is not a case of lacking expertise, the Police sometimes lack the infrastructure facilities to investigate certain pyramid schemes, making them rely on other domestic entities. “We have only relied on a foreign lab for investigations once,” Manathunga said. “When we lack infrastructure facilities, we usually rely on the University of Moratuwa and the Telecommunications Regulatory Commission,” Manathunga explained, emphasising that the investigation of foreign reports often results in delays. This echoes Dr. Weerasinghe stating that while the oldest pyramid scheme was identified in 2011, the legal process pertaining to the same is however still incomplete. 

A pyramid type prohibited scheme is a scheme where participants must pay money or a monetary value to register in the scheme, and which offers continuous commissions or income to its participants based on their referrals to recruit new members into the system or such newcomers paying more money or if the participants are asked to pay money or a monetary value to join into the scheme, and income can be earned by introducing new members into the scheme or increasing the contribution or investments of the newcomers. Naked pyramid schemes involve recruiting only with an entry fee while product-based pyramid schemes involve recruiting people by selling products or services.

The Central Bank has issued a notice stating that participating in pyramid schemes is a punishable offence and has identified several entities that conduct prohibited schemes. The Police noted that several pyramid schemes are now operated via social media.