May 30, 2012 (LBO) – Sri Lankaâ€™s central bank has warned public against engaging in illegal foreign exchange transactions, which promises to give higher returns. The bank said foreign exchange transactions or remitting cash outside Sri Lanka, needs the prior approval of the Exchange Control department.
Those violating exchange control laws run the risk of being punished, the bank said urging people to stay away from such schemes.
Forex trading is a high risk activity, often offered with high levels of leverage, which can wipe out the entire amount ‘invested’ in a few minutes.
Analysts say in the past illegal forex trading outfits have engaged in fraudulent practices to hide losses and persuade unsuspecting customers keep trading by selling contra positions instead cutting losses. The monetary regulator said individuals and firms are advertising their services in print, online and electronic media to lure unsuspecting investors.
â€œThese agents.. often exhort, people to trade in foreign exchange, depositing an initial investment in Sri Lanka rupees, with a company, proprietorship concern or individual in Sri Lanka to be transferred later into an online account or, payment through credit, debit or any other electronic funds transfer card direct to an online account opened in the name of the investor,â€ the Colombo-based bank said Wednesday.