Prime Bank Guarantee Scam
The prime bank guarantee scam is a high stakes swindle that was first warned about in 1993. It has the lure of big money, big institutions, secrecy and playing on a large international stage. But the bottom line is that it's just as much of a swindle as anything else - just on a bigger level; according to the International Chamber of Commerce, this type of scam involves £5 million daily in North America alone.
How It WorksSomeone - possibly a good friend or relative - invites you to join a scheme that will make you rich through access to "bank guarantees" which they say can be bought at a discount and sell shortly thereafter at an enormous premium. The likes of pension funds are on stand by, to buy "Prime Bank letters of credit" from large banks. However, the regulations mean that the deals have to go through a middleman. Often the claim is that you'll make a 20% profit within 30 days.
With the amounts being discussed, you'll be part of a pool of investors dealing on the same level as oil sheiks and the world's richest. You'll probably be told not to bother seeking professional advice because the information is reserved only for those who participate in the program, which is "by invitation only." Indeed, secrecy is so important that you'll be thrown out and maybe taken to court if you try to obtain an independent assessment. Even the bank listed on the documents (supposedly some of the world's largest) can't discuss the deal unless you're the principal investor.
You might well be told that there's no need to worry because every last pence is secured fully by a 'Letter of Credit', whuc is a bank-endorsed guarantee or any other guaranteed bank certificate supported by the world's top or "prime banks," or that it's risk-free and sanctioned by the International Monetary Fund, that it has an "IMF Number", an "IMF Country Registration Number," or an "IMF Approval Number for Projects."
What they will claim is that this is a "roll programme," in which the funds are leveraged several times to maximise the returns. However, when it's time to pay up, your investment, and the company behind it, has vanished.
How To Avoid The ScamThe first rule of investing is to question everything that "guarantees" you a high return. There simply are no risk-free high returns. The higher the possibility, the greater the risk of loss.
No legitimate transaction would actively discourage you from investigation. In fact, the greater the amounts involved, the more transparent everything should be.
Investigate everything thoroughly before investing your money, especially at these levels (generally a minimum of £10,000). If they threaten to expel you or not let you in, simply walk away.
Be aware the foreign banks do use "bank guarantees" in the same manner that U.K. banks employ a system were letters of credit are used to insure payment for goods in international trade; these bank guarantees are never sold or traded on any kind of market.You should also know that the IMF does not operate through other agents and it does not endorse the activities of any bank, financial institution, or other public or private agency.
Remember that producing authentic-looking documents is relatively easy, as is forging signatures. You should do nothing before consulting both a lawyer and your independent financial advisor. Never invest unless you completely understand the deal. Con artists will try to bamboozle you with complex terms and maths. Never invest more than you can afford to lose. All investment is a risk.
What To Do If You're A VictimInform both the police and the Financial Services Authority. Make sure you have copies of all your paperwork, and notes of all phone conversations, including dates and times, they can follow up, and if they find the perpetrators, prosecute them.
Be aware, though, that the chances of recovering your money are small. This is an extremely complex scam perpetrated by professionals.