10-year jail for MLM touts

The cabinet yesterday approved the draft of the Multilevel Marketing Activities (control) Act-2013, aiming to protect people from being cheated by MLM firms and bring them under a legal framework.
According to the proposed act, every multi-level marketing (MLM) company must obtain a licence before starting its business.
If any person is found operating an MLM business without a valid licence, he or she will be awarded a minimum of 5 years and maximum 10 years' imprisonment and a penalty of Tk 50 lakh, said Cabinet Secretary M Musharraf Hossain Bhuiyan.
He was talking to reporters after the weekly cabinet meeting at the Secretariat.
Under the proposed law, those involved in MLM businesses must obtain licences within 90 days from the issuance date of the ordinance.
Primarily, the licence will be valid for one year and it can be renewed every year, he added.
The move to frame the new law comes following reports of fraud by different MLM entities which had raised funds from people by promising hefty gains within a short time.
The government had found the involvement of Unipay2U and Destiny Group in misappropriation of public money in recent years.
The Anti-Corruption Commission had already filed money laundering cases against top officials of Destiny and its related concerns.
Due to an absence of laws, the MLM firms, which came into existence in the last decade, had cheated people with false promises, officials said.
The cabinet secretary said MLM companies would be authorised to sell only household, electronics and agricultural products.
Money could not be taken from people in other forms in the name of selling products or services, he added.
The law, after its promulgation, will give the government authority to take over any MLM company on the ground of public interest. The government will be able to appoint an administrator to the firm through a gazette notification.
The government will also be able to cancel the licence of any MLM company for violating the law, the cabinet secretary said, adding that if anyone commits the same offence twice, the punishment will be double.
He said an ordinance will be promulgated to make the law effective soon as Parliament is not in session now.
Over the last one year, Registrar of Joint Stock Companies and Firms (RJSC) has cancelled the registration of 77 MLM entities out of 128.
The cabinet meeting yesterday also endorsed the draft of the Financial Reporting Act-2013. Once the law is made effective, there will be a boost in the stock market, said the cabinet secretary.
The meeting also approved the schedule of specific commitments under the Saarc Agreement on Trade in Services (SATIS).