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Multi Level Marketing – Curbs on Fraudulent Companies

CLR SnippetsMulti Level Marketing (MLM) Schemes involving enrollment of a vertical chain of investors/agents constitute Money Circulation and are banned under the Prize Chits & Money Circulation (Schemes)Banning Act, 1978 which is implemented by the States. Giving this information in written reply to a question in the Rajya Sabha, Shri Sachin Pilot, Minister of Corporate Affairs, said that in order to facilitate effective control of MLM, a Group of Officers from Ministries of Finance, Corporate Affairs & Consumer Affairs along with representatives of Reserve Bank of India, Central Economic Intelligence Bureau (CEIB) and the Serious Fraud Investigation Office (SFIO) have prepared Model Rules called Money Circulation Scheme (Banning) Rules, to explicitly cover Mutli Level Marketing under the said Act. Ministry of Finance (Department of Financial Services) has sent the rules for notification to the States.

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Tags: Central Economic Intelligence BureauMinistry of Corporate AffairsMLMMulti-level marketingRajya SabhaReserve Bank of IndiaSachin PilotSchemes

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