Regulatory exam (RE) fraud has surfaced yet again, this time in a bold scheme on social media. A fake RE5 exam certificate was shamelessly advertised on Facebook as a “50% special sale”, slashing the price to just R100.
The FSCA recently issued a public warning against Mulalo Rakhadani, stating that he had been selling fraudulent RE certificates on social media platforms.
“Mr Rakhadani uses the Facebook platform to sell the fraudulent RE certificates and fraudulently uses the name and logo of the FSCA as part of his scam,” the Authority noted.
Efforts by the FSCA to contact Rakhadani for comment were unsuccessful.
Since the warning was issued, almost all Facebook posts related to the matter have been deleted – except for one that Moonstone managed to uncover. In the post, Rakhadani advertises three certificates: Company Cleaning, Early Childhood Development, and RE5.
In describing the RE5 certificate, the post reads: “This certificate plays a very big role for you most especially if you wanna find yourself working at any financial sectors such as banks and other cash solutions infrastructures. Also, if you wish to be a loan shark/mashonisa it can play a very big role for you because it’s one of the requirements to be a legal/registered loan shark. It was R200, Now it’s only R100.”
In the post, Rakhadani claims that all the certificates are accredited by both private and public sectors.
According to the FSCA Regulatory Actions Report 1 April 2023 – 31 March 2024, the FSCA registered 483 new investigation cases, finalised 418, and saw a 20% increase in ongoing cases to 375 during the reporting period. The majority of new cases related to potential misconduct in the FAIS and Insurance sectors. Notably, fraud involving the FAIS regulatory examinations accounted for 8% of the FAIS investigations.
The FSCA noted in the report that this type of misconduct remained a concern.
“We expect financial institutions to apply proper due diligence processes when appointing individuals to regulated roles, rather than merely relying on certificates without verifying their validity. Institutions must ensure rigorous vetting to prevent access to the financial sector by perpetrators of this type of fraud,” the Authority stated.
Firms urged to verify RE certificates
Exam fraud includes candidates buying forged or fake examination certificates, unlawfully altering exam certificates (certificate fraud), paying other people to impersonate them when writing an exam (identity fraud), and paying people who supposedly have some form of control over the examination process to guarantee a successful pass.
In October last year, Katherine Gibson, one of the Authority’s three deputy commissioners, on Thursday issued a seven-page communication on RE fraud. The emphasis of Communication 38 of 2024 (FAIS) is that FSPs have a regulatory obligation to verify the authenticity of RE certificates.
Read: Exam fraud: FSCA urges financial firms to verify RE certificates
The communication describes the various types of exam fraud and the tactics employed by fraudsters, who have become adept at using social media to lure candidates into their schemes. Fraudsters create support groups or forums targeting individuals struggling with the exams. These groups often disguise illegal services, such as selling fake certificates or offering to write the exam on the candidate’s behalf, under the pretence of providing assistance.
The Authority says the following are potential indicators of exam fraud:
- A candidate repeatedly attempts the RE through his or her employer’s enrolment system but then suddenly switches to private enrolment and passes the exam.
- A candidate consistently writes the RE at a particular venue but abruptly changes to a different examination centre and passes.
- A candidate shows a pattern of multiple failures followed by an unexpected pass with a significantly higher score compared to previous attempts.
Work directly with Moonstone
Moonstone is the only institution approved by the FSCA to provide the RE5 exam in South Africa. The FSCA encourages candidates registering for the RE exams to work directly with Moonstone.
To verify a certificate, candidates must submit a request, including a copy of their Identity Document or passport, the certificate(s), and written consent to share RE-related information with either the FSCA or Moonstone.
- FSCA verification: Requests and supporting documents must be emailed to the FSCA Business Centre at businesscentre@fsca.co.za.
- Moonstone verification: Requests should be emailed to faisexam@moonstoneinfo.co.za. For any inquiries about the RE or verification process, contact 021 883 8000.
Under its FSCA mandate, Moonstone can only confirm whether a certificate is valid or not. If the certificate is authentic, a standard confirmation email will be sent after authentication. If found to be fraudulent, the certificate will be reported to the FSCA.
If FSPs use a verification agency, they must ensure the agency conducts verification directly through either the FSCA or Moonstone.
The FSCA advises FSPs to keep detailed records of the verification process, including communication with Moonstone or the FSCA, and the results of the certificate’s authenticity. If a fake or altered certificate is identified, FSPs should immediately report it to the FSCA and take appropriate action, such as rejecting the candidate or initiating a debarment process if the candidate is already employed.
