Two men and a woman were arrested yesterday for promoting a multi-level marketing (MLM) scheme that was illegal.

They also did not have the required licence to operate a business in a regulated activity, said the police in a statement.

Aged between 44 and 61, the trio were arrested after an investigation by the Commercial Affairs Department into a scheme offered by an overseas company to investors here between 2013 and 2015.

The company promised investors monthly returns of about 6 per cent to 8 per cent, supposedly derived from trades in leveraged foreign exchange.

In such trading, gains or losses are made on the movement of exchange rates between currencies, using borrowed capital.

Investors were also able to receive referral commissions if they recruited new investors to the scheme, and if those new investors then recruited others.

The police advised members of the public that it is unlawful to promote or participate in a non-exempted multi-level marketing or a pyramid-selling scheme.

If found guilty under Section 3 of the MLM Act, one can face a fine of up to $200,000, up to five years' jail, or both.

It is also illegal to carry out a business in any regulated activity without a Capital Markets Services Licence from the Monetary Authority of Singapore, unless otherwise exempted or excluded.

If found guilty under Section 82 of the Securities and Futures Act, one can be fined up to $150,000, jailed for up to three years, or both.

In an MLM or pyramid scheme, participants typically pay to join, but are promised financial rewards for recruiting new members.

While pyramid schemes are illegal, some MLM businesses are allowed. These are insurance companies, master franchises and direct-selling companies that meet certain criteria.