You made money in FrancSwiss? You’re not yet off the hook

Now, the serious stuff.

By now, we know that the police are hunting down the owners and operators of online investment scams such as FrancSwiss, and the Philippine Daily Inquirer's Money Smarts blog recently mentioned that recruiters who marketed Ponzi programs are not spared.

So if you were a mere investor who made money in FrancSwiss (or all these other online Ponzi scams), you have nothing to worry about, right?

Think again. The government can run after your profits, under the country's Anti-Money Laundering Act.

The Anti-Money Laundering Act of 2001 or AMLA criminalizes money laundering, which by definition, is a "crime whereby the proceeds of an unlawful activity are transacted or attempted to be transacted to make them appear to have originated from legitimate sources." One salient feature of AMLA is the seizure and forfeiture of "dirty money" if they were deemed to have come from unlawful activities. A list of "unlawful activities" is mentioned in the Philippine Anti-Money Laundering Council (AMLC) website.

First question: Is FrancSwiss illegal?

Well, the Securities and Exchange Commission (SEC), together with the Bangko Sentral ng Pilipinas, has branded FrancSwiss as a Ponzi program. In an advisory issued on April 2002, the SEC noted that Ponzi and pyramid schemes are illegal under Section 53 of the Consumer Act of the Philippines.

In addition:

[P]yramid schemes also fall under the category of investment contracts insofar as it involved a solicitation of money that is pooled into a common fund with promises of profits through the efforts of others. Being in the nature of investment contracts these should be registered with the Securities and Exchange Commission pursuant to Section 8 of the Securities Regulation Code (SRC). Offering unregistered investment contracts is illegal and carries a penal sanction under Section 73 of the SRC. (emphasis ours)

In that case, are FrancSwiss profits covered by the AMLA? 

Unless FrancSwiss is proven to be a legal or legitimate investment program, profits from FrancSwiss can be considered "covered" and/or "suspicious transactions," especially if the withdrawals were processed through a banking institution in the Philippines (e.g., Banco de Oro). 

"Covered transactions" are single transactions in cash or other equivalent monetary instrument involving a total amount in excess of Five Hundred Thousand (P500,000) Pesos within one (1) banking day.

"Suspicious transactions" are transactions with covered institutions, regardless of the amounts involved, where the transaction is related to an unlawful activity/offense under the AMLA.

What then can the government do with regard to those profits?

Simply speaking, it can freeze and forfeit that money. Quoting the AMLA website:

The Court of Appeals, upon application ex parte (without notice to the other party) by the AMLC and after determination that probable cause exists that any monetary instrument or property is in any way related to an unlawful activity, may issue a freeze order which shall be effective immediately. The freeze order shall be for a period of 20 days unless extended by the court.

Even if you withdrew or moved those FrancSwiss profits you "earned," as long as they passed through banking and/or financial institutions — which means the movement can be tracked — the government can run after your profits if it wants to.

But then again, that's a big IF, considering the laborious efforts needed and the complex web of transactions and parties involved. So if you were a mere FrancSwiss investor who managed to earn profits, just wait. Let us know if ever this has come true.

Discuss FrancSwiss in the HYIP: FrancSwiss thread in the PMT Forum. 

If ever this would materialize, FrancSwiss is not going to be the first investment scam where prosecutors will run after investors who made money. The Receiver of 12DailyPro, another online investment scam, hinted in his latest Court Report that he may recover "ill-gotten gains from investors."

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