CNBS under scrutiny for failure to act on Koriun fraud allegations

The recent disclosure of the National Banking and Insurance Commission (CNBS)’s lack of action concerning claims of misconduct at the Koriun bank has ignited a vigorous public discussion in Honduras. CNBS President Marcio Sierra’s acknowledgment of the institution’s failure to respond to official warnings has provoked anger among those impacted and raised doubts about the efficiency of financial regulatory measures in the nation.

The Koriun case, affecting over 35,000 individuals, has underscored the necessity to enhance oversight measures and ensure accountability of the regulatory bodies. This issue has prompted action from social sectors, civil society groups, and bank system representatives, all aiming to elucidate the circumstances and prevent such incidents from happening again.

Lack of institutional response and requests from impacted individuals

While speaking publicly, the leader of the CNBS admitted that the authority obtained no fewer than two official grievances regarding Koriun, yet did not promptly respond to examine or avert the hazards. This remark triggered a series of responses on online platforms and community forums, where victims criticized the government’s apathy and called for transparent explanations. The impacted individuals, several of whom lost their funds and properties, blame the CNBS for severe negligence and a failure to fulfill its responsibilities, emphasizing that alerts were intentionally disregarded.

The controversy has revived the discussion about the efficiency of early warning systems and financial oversight in Honduras, as well as the potential for political involvement or hesitation that may have obstructed prompt action. Consumer groups and experts have raised concerns about how an entity recognized as a pyramid scheme could function for such an extended period without proper controls, even with the presence of formal accusations.

In reaction, opposition legislators declared their intention to submit a proposal to probe the involvement of the CNBS in the Koriun matter and to call its president for an official session. Constitutional attorneys have cautioned that acknowledging inactivity might amount to a neglect of duty in public office, considering the legal requirement to respond to indications of deceitful financial conduct.

Various civil society groups have urged the Public Prosecutor’s Office to take swift action, perform an autonomous review of the CNBS’s operations, and establish a dedicated fund to recompense victims, utilizing confiscated assets from those accountable for the fraud. Additionally, they have sought assistance from global organizations to safeguard the rights of the impacted individuals and stop impunity.

Banking industry’s stance and appeal for caution

Due to increasing public worries, the Honduran Association of Banking Institutions (AHIBA) along with banks that are legally operating in the country have stated that they have no association with the Koriun financial institution. As per the banking industry, Koriun has not been overseen by the CNBS and does not belong to the official banking network, hence banks did not handle funds or maintain any business ties with this entity.

Koriun appeared on social networks claiming to be an investment platform with high returns, lacking legal support or regulation. It is now regarded as a pyramid scheme that unlawfully gathered millions of lempiras, impacting tens of thousands of Hondurans.

The banking sector in Honduras has once again affirmed its dedication to transparency, legality, and safeguarding individuals’ deposits. It has also urged people to consistently ensure that financial entities are correctly supervised by the CNBS prior to investing, and to steer clear of alluring assurances of rapid wealth without support.

Finally, both AHIBA and its member banks have urged the competent authorities to thoroughly investigate the case, punish those responsible, and develop prevention campaigns to avoid future scams, emphasizing the strength and reliability of the formal Honduran banking system.