Gold Scams in Kenya: Essential Buying Tips for Investors

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In recent years, Kenya has seen a surge in the popularity of investing in gold. While this precious metal has long been a symbol of wealth and prosperity, it has also become a magnet for scams and fraudulent activities. 

Our clients consulted extensively about this topic, so we wrote this article to create awareness around gold scams in Kenya and provide buying tips for gold investors.

Gold has a timeless appeal. Its shimmering beauty and historical significance make it a coveted asset for investors worldwide. In Africa, the allure of gold lies in its intrinsic value and the promise of substantial returns since everything is cheaper at the source, and Africa accounted for ¼ of the world’s gold output in 2021 at 870 metric tons.

While a significant percentage of the world’s gold hails from African countries like South Africa, Ghana, Sudan, Mali, Tanzania, and the Congo, it’s essential to be aware that Kenya’s gold production in 2021 amounted to a mere 292 kg (645 lbs) and Kenya’s gold reserve value is 1.070 million US dollars as of June 2023. 

This fact underscores the need for careful consideration, as numerous “gold sellers” unfortunately engage in fraudulent activities without access to real gold.

Before embarking on a gold purchase agreement, we recommend contacting a legal expert, such as the team at our firm, Kraido Advocates. We are well-equipped to conduct thorough due diligence and offer escrow services, ensuring the protection of your investment.

Our law firm possesses the authority and expertise to scrutinize legal documents, review any ongoing court cases the parties might be involved in, verify the authenticity and origin of the gold, and efficiently manage the transaction and escrow through our clients’ accounts. 

Our comprehensive approach guarantees that you receive genuine gold while the seller promptly receives their payment. Your investment remains secure under our diligent care.

How Do Gold Scams Work?

Like many big scams, gold scams target high-networth individuals looking to diversify their portfolios, and the goal is to win their trust, get them to let their guard down, and play on their limited knowledge of the jurisdictions and laws before making away with their money. 

The scams range from selling the victims counterfeit gold to not delivering any product and taking their money through deception.

Unsuspecting buyers often purchase what they believe to be genuine gold, only to discover that they have been duped with worthless replicas.

Alternatively, in some cases, the deal drags on indefinitely, with scammers persuading their victims to keep shelling out money. By the time these unfortunate buyers realize they’re not getting any gold, they’re already deep in the hole, having lost several hundred thousand or even millions of dollars.

The gold scammers often exploit the victim’s lack of knowledge about Kenya’s procedures. For instance, they might request payments for non-existent taxes, bogus clearing fees, and other fabricated charges for a gold consignment that doesn’t even exist.

This is why we recommend engaging professionals and always following the correct procedures as you would with any significant purchase, like documentation, and avoiding paying in cash. 

NTV News report highlighting gold scams in Kenya and an American victim

Why Gold Scams in Kenya Often Go Unsolved

At Kraido Advocates, we’ve helped thousands of clients over the decades we’ve been in operation, and through this, we have gained an extensive understanding of the courts and criminal justice system in Kenya. 

We have partnered with human rights groups, and our lawyers have gained an insider’s look into the legal systems through these activities.

So we assure you that there are offenders of many nationalities incarcerated in Kenya’s prisons for different natures of crimes, including scamming, so the system works; it just happens that the following reasons hinder our prosecution’s efficiency:

1. Scammers Use Fake Identities

When attending court for cases involving fraudulent activity, you may hear the judge refer to the defendant by their real name as well as their multiple aliases.

Scammers often evade justice by assuming multiple identities, including using national ID cards and deceased people’s identities to register documents.

Scammers like to control narratives to deceive people, so it’s crucial to establish a person’s true identity to avoid falling victim to their tricks.

2. Gold Scammers Are Often Non-Kenyan Citizens

Getting away with crime in Kenya is not as easy. Still, when the scammers are from other African countries, use fake identities, and leave the country right after a completed operation, the law can be limited in providing help to their trail of victims. 

Once a case is out of the Kenyan government’s jurisdiction, the chances of recovering the stolen assets or getting any reprieve by seeing the criminals face jail terms diminish significantly. 

3. Scams Target Foreign Nationals

Many victims of gold scams in Kenya are foreign nationals with minimal experience with the Kenyan jurisdiction.

When you travel to Kenya to purchase gold, working alone can be risky because scammers create false stories and non-existent scenarios you wouldn’t be able to verify, especially considering that for the scams to work, the perpetrators stage a false sense of urgency to get you to pay up fast.

This is why we emphasize seeking the services of an impartial entity you can trust.

4. Corrupt Officials

On the darker side of gold scams in Kenya, we have the looming corruption problem.

Unfortunately, achieving justice can be an uphill battle due to corrupt officials who are susceptible to bribery and willing to ignore these crimes.

Additionally, some public officials are linked to the scams themselves, and getting justice against them can be nearly impossible. Therefore, upfront due diligence and working with reputable firms is the most effective way to trade safely.

Tips for Gold Investors in Kenya

Losing money on an investment is always challenging, especially when the money ends up in the wrong hands. That is why we recommend observing the following to avoid falling prey to gold scams in Kenya, whether buying on your own or through a trusted party.

1. Avoid Cash Transactions

One golden rule stands out when buying gold in Kenya: avoid cash transactions like the plague.

While the allure of using cash might seem convenient, and the scammers may devise a justification, don’t buy into it, as it’s always a magnet for trouble. Opt for electronic or bank transactions to ensure a documented financial trail for transparency and an extra layer of security to your investment.

We have been involved in cases where clients came to us for help, claiming to have been persuaded into making cash payments, making it incredibly challenging to track the money or locate the perpetrators.

2. Use Escrow Services

Escrow services like those provided by law firms are like the trustworthy custodians of your investment.

These services are often offered by legal firms like Kraido, who must have an indemnity cover with an insurance provider and the legal mandate to act as impartial middlemen.

We hold on to the funds until you and the seller meet your obligations. Knowing that your investment is safe and sound until all the ducks are in a row is the ultimate peace of mind.

3. Stay Cautious and Patient

Patience is an essential trait for any investor. While getting caught up in the excitement of wanting to close a deal is easy, we recommend vetting the entire process and the sellers to avoid costly mistakes.

Scammers are also fond of creating a false sense of urgency or the fear of missing out, which highlights the need to be more cautious whenever you feel the slightest pressure to make payments or seal the deal.

4. Conduct Thorough Due Diligence

It is crucial to verify the seller’s identity, the authenticity of the gold, and their mining operation.

Due diligence services can save you money and time and uncover pitfalls during the business deal. Luckily, our law firm provides due diligence services for all sorts of business deals in Kenya, including gold purchases.

5. Seek Legal Counsel

Having the counsel of a law firm experienced in the Kenyan jurisdiction can make your investment journey much smoother. 

Having a legal ally can make all the difference, so seek our consultation services today, and we’ll schedule an online call or in-office visit to help you navigate the complex world of gold transactions.

6. Document All Transactions

When buying anything from individual sellers, paperwork is your ally. We encourage record-keeping of every communication, agreement, and financial transaction related to your purchase. Keep those payment receipts close because it keeps things transparent and serves as a safety net should any disputes arise.

Did you know that well-kept documents ensure reputable organizations and entities are involved? This solidifies the foundation of your investment because the companies issuing the receipts have internal audit processes and scrutiny that fight fraud.

Make this and the other tips in this list a part of your gold-buying journey in Kenya and increase your chances of success.

7. Understand Kenya’s Legal Jurisdictions

Kenya’s legal landscape can be a maze, especially for newcomers. Take the time to understand the legal jurisdictions and regulations of gold transactions. Being in the know will protect your interests and ensure you’re operating within the bounds of the law.

We have resources on our site to get you started on understanding Kenyan laws, and should you need follow-up consultations, email us at [email protected] or via our contact page.

8. Consider Local Partnerships

Connecting with the locals who know the ropes is essential when in unfamiliar territory. Our recommendation? Forge partnerships with well-established local businesses with a track record in the gold industry.

This partnership guarantees you’re dealing with trustworthy traders and provides valuable insights into how the market operates here. It’s like getting an insider’s guide to the gold scene. And remember, if a deal seems too good to be true, it probably is. 

These partnerships will be your keen eye for spotting those suspiciously tempting offers.

9. Consult Local Authorities

If you opt to proceed with the deal independently, contact local authorities to verify the seller’s authenticity and gain valuable insights. 

The police can inform you with a high level of certainty whether a deal is genuine if they have received numerous complaints.

Frequently Asked Questions

Is investing in gold a safe option in Kenya?

Purchasing gold in Kenya is safe if you take the necessary precautions, follow legal guidelines, verify the seller’s credentials, and demand proper documentation or engage the services of professionals like lawyers and investment firms.

How can I tell if the gold I’m buying is genuine?

To ensure the authenticity of gold, always demand certification and consider hiring an independent appraiser to assess its value.

What should I do if I suspect a gold scam?

If you suspect a gold scam, break any contact or involvement and report the issue at the nearest police station to prevent others from falling victim to the same scheme.

Are there any government regulations regarding gold trading in Kenya?

Yes, there are government regulations governing gold trading in Kenya. Ensure that the seller is registered and licensed to trade in gold.

Conclusion

Investing in gold can be a lucrative venture, but it comes with risks, so before getting into an agreement to buy gold in Kenya, we recommend taking the necessary precautions.

Gold scams are often intricate and involve multiple people and made-up scenarios, which can be hard to catch unless you engage professional services.

Due diligence experts can help you understand how things work so you’re not misled into losing money.

By following the legal buying tips outlined in this article, investors can minimize their exposure to fraud and make informed decisions when entering the world of gold investment.

For help in seller verification, purchase agreement drafting, due diligence, and escrow, don’t hesitate to contact our law firm today, and our lawyers will help you protect your investment.

For further legal help and consultation, don't hesitate to contact Kraido Advocates by calling +254 799 180 755 or via our FREE INQUIRY FORM.
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