Bangladesh Bank (BB) has warned people against transacting with multilevel marketing companies offering excessive returns on deposits, stating that such activities fall under money laundering.

The banking regulator is also investigating alleged fraudulent activities in this regard.

The warning follows recent media reports about fraudulent schemes.

The central bank said such investment schemes promise unusually high returns while seeking deposits or investments from the public.

Pyramid and Ponzi schemes are major features of multilevel marketing companies, which are highly risky as investors can lose their money, the BB said in a circular today.

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The BB cited previous scams such as Jubok, Destiny, and recent e-commerce scams involving firms such as Evaly, where people were lured by offers of attractive profits and unrealistic discounts.

It said these fraudulent models do not generate legitimate profits. Instead, they shift money between investors until the scheme collapses. When that happens, most participants lose their investments.

The central bank emphasized that only licensed financial institutions can legally collect deposits.

Violating this regulation is a punishable offence under the Bank Company Act, 1991, the BB said.

It urged people to be cautious and avoid parking money in such schemes.