On 25 June 2026, the Central Bank of Lesotho (“the CBL”) issued a public warning (Ref: 25062026/1) cautioning the public against a growing number of individuals and investment platforms that promise unusually high returns or solicit deposits from the public without a licence.
The release named four schemes specifically: the SGK Investment Scheme (also trading as SGK Platform or SGK Elite), Prestige Wealth Investments, Lengau People’s Society and the Prime Aura Platform. The CBL confirmed that none of these entities holds a valid licence issued by it, and that some schemes and their promoters had falsely represented themselves as CBL-licensed in order to induce deposits.
For members of the public, the message is a warning. For directors, employers, church and burial society leaders, accountable institutions and anyone who has already parted with money, the release raises a set of legal questions that deserve a more careful answer than “be careful”. This article sets out the regulatory architecture that sits behind the CBL’s statement, the exposure faced by promoters and recruiters, and the remedies available to those who have suffered loss.
1. Why a licence matters: the statutory position
Lesotho’s financial sector is a licensed sector. The Financial Institutions Act No. 3 of 2012 (“the FI Act”) provides the framework for the authorisation, supervision and regulation of banking and non-banking financial institutions, their agents and ancillary service providers. The Governor of the CBL acts as the Commissioner of Financial Institutions under the Act.
Three features of the FI Act are directly relevant to the schemes named in the CBL release:
(a) Deposit-taking is reserved conduct. The Act restricts the acceptance of deposits or funds from the public to licensed institutions, and demand deposits repayable on demand may be accepted only by a licensed commercial bank. A platform that invites the public to “invest” sums that it undertakes to repay with a guaranteed return is, in substance, soliciting deposits, regardless of the label attached to the transaction.
(b) Contravention is a criminal offence. A person who accepts deposits without the requisite licence commits an offence and is liable, on conviction, to the fine or the term of imprisonment provided in the First Schedule to the Act, or to both. Importantly, where the offender is a body corporate, the Act directs that the custodial penalty applies to any director, officer or person responsible for carrying out the unauthorised act. Incorporation is therefore not a shield.
(c) Agents require their own authorisation. A person acting or proposing to act as agent of a financial institution, representing it or undertaking activity on its behalf in Lesotho, must apply to the Commissioner for a licence before doing so. This provision is often overlooked by the local “team leaders”, recruiters and referral agents who onboard investors on behalf of an offshore platform.
Layered over the FI Act are the Money Laundering and Proceeds of Crime Act No. 4 of 2008 (as amended by Act No. 7 of 2016), which establishes the Financial Intelligence Unit and enables the proceeds of serious crime to be identified, traced, frozen, seized and confiscated; and the Penal Code Act No. 6 of 2010, under which fraud and theft by false pretences are ordinary criminal offences. A false representation that an entity is CBL-licensed, made to induce a deposit, engages the Penal Code squarely.
2. The exposure of promoters, recruiters and “team leaders”
A recurring feature of these schemes is that the true principals are offshore, unidentified, or both, while the people who actually took money from investors are local, identifiable and often known personally to those they recruited. That distribution of visibility has legal consequences.
Criminal exposure. Local recruiters may face liability under the FI Act (unlicensed deposit-taking, or acting as an unlicensed agent), under the Penal Code (fraud, where the representations made were false and known or suspected to be so), and under the money laundering legislation where scheme proceeds were passed through their personal bank accounts. The frequent practice of routing deposits through the accounts of nominees or unrelated third parties does not insulate the account holder; it tends to attract scrutiny.
Civil exposure. Under the Roman-Dutch common law applicable in Lesotho, an investor who was induced to part with money by a fraudulent or negligent misrepresentation has a delictual claim for damages against the person who made it. Where money was paid over pursuant to an unlawful or void arrangement, a claim in unjustified enrichment may lie against the recipient. Recruiters who earned commission or override income on downstream recruits are exposed on both fronts, and the fact that the recruiter also lost money personally is not a defence to a misrepresentation claim — though it is often relevant to intent, and therefore to the criminal enquiry.
Corporate exposure. Where a Lesotho company was incorporated as the local face of a scheme, directors face the ordinary duties under the Companies Act No. 18 of 2011, and may face personal liability where the company was used to carry on business recklessly or for a fraudulent purpose. Persons who allowed their names to be used to register a company or open a bank account “as a favour” frequently discover that they have assumed the position, and the exposure, of a director.
3. Institutional risk: employers, churches, burial societies and savings clubs
Schemes of this kind spread through existing networks of trust rather than through advertising. Where recruitment occurs within a workplace, a congregation, a stokvel or a burial society, the institution itself may face difficult questions:
- Was scheme membership solicited by a person acting with the apparent authority of the institution?
- Were institutional or pooled funds, society contributions, welfare funds, group savings, deployed into the scheme, and on whose mandate?
- Did the leadership endorse, permit or fail to prevent the solicitation?
Committee members of savings and burial societies hold funds in a fiduciary capacity for the membership. A decision to place pooled funds in an unlicensed platform is likely to be a breach of that duty, and members may have recourse against the committee personally. Employers, for their part, should consider whether workplace policy permits the promotion of investment products on the premises at all.
4. If you have already invested: practical steps
- Preserve the record now. Screenshots of the platform, the app, dashboards, WhatsApp and Facebook groups, recruitment messages, payment confirmations, proof of payment and bank statements. Digital platforms disappear quickly, and evidence that is not captured is generally lost.
- Identify the counterparty properly. Record the name of the person who recruited you, the account into which you paid, the account holder’s name, the reference used, and any local entity name given to you.
- Report. Complaints may be laid with the Lesotho Mounted Police Service and reported to the Financial Intelligence Unit. The CBL should be notified where an entity has falsely claimed to be licensed by it.
- Take advice on civil recovery early. Where funds remain traceable, in a local bank account, in property, or in the hands of an identifiable recipient, urgent preservation relief may be available. Delay is usually fatal to recovery, because the money moves.
- Do not pay “release fees”. A demand for administration fees, clearance charges or taxes as a precondition to releasing your funds is a well-established second-stage fraud practised on the victims of the first.
5. Verifying a licence before you invest
The CBL’s release repeats two simple precautions that would defeat most of these schemes: demand proof of a valid CBL licence, and verify that licence directly with the CBL rather than relying on the documentation the promoter supplies.
Licensed institutions may be verified at https://centralbank.org.ls/other-financial-institutions-2/, or by telephone on +266 22232461 / 22232429 / 22232517 / 58880647, or by WhatsApp on +266 58880647.
Beyond licensing, the durable warning signs are well known: guaranteed or fixed high returns irrespective of market conditions; returns that depend on recruiting others; pressure to act quickly; payment into the personal account of an individual rather than a corporate account; no audited financials, no identifiable directors and no physical place of business; and a business model that cannot be explained in plain terms.
6. The cross-border dimension
Because participation in these platforms typically spans the Lesotho South Africa corridor, investors and promoters may find themselves exposed on both sides of the border. In South Africa, the taking of deposits from the general public without registration is prohibited under the Banks Act 94 of 1990, and multiplication schemes and pyramid schemes are expressly prohibited under section 43 of the Consumer Protection Act 68 of 2008. The Financial Sector Conduct Authority and the Prudential Authority exercise the corresponding supervisory and enforcement functions.
Where money crossed the border, questions of jurisdiction, applicable law, the situs of assets and the enforcement of judgments arise immediately. These are not incidental issues, they usually determine whether recovery is feasible at all.
This article is provided for general information only and does not constitute legal advice. It reflects the position as at July 2026. The named schemes are referred to solely as they appear in the Central Bank of Lesotho’s public release of 25 June 2026. No allegation is made in this article against any identified individual. Readers should obtain advice on their specific circumstances before acting.