Shock over licensing

A man walks past the FBME Bank in Dar es Salaam yesterday. BoT has taken over the bank management. PHOTO | SALIM SHAO      

By The Citizen Reporter

In Summary

On Friday BoT took over the management of FBME which the US had accused of large-scale money laundering and financing of criminal activities such as funding terrorism.

Dar es Salaam. The Bank of Tanzania (BoT) could have avoided the potential FBME licencing embarrassment had it heeded advice of banking supervision inspectors, The Citizen on Sunday investigations have established.

On Friday BoT took over the management of FBME which the US had accused of large-scale money laundering and financing of criminal activities such as funding terrorism.

The decision came a week after the Central Bank of Cyprus took over the management and operations of FBME branches there.

Tanzania is the headquarters of FBME.

Impeccable sources told The Citizen on Sunday that BoT had always ignored alerts on the dubious activities of the bank and rebuffed calls for FBME to abide by the ownership rules for commercial banks doing business in the country.

The experts say because of such negligence, BoT will not escape blame for tarnishing Tanzania’s image.

“What is really shocking in this case is the failure of the Bank of Tanzania to supervise it. This is a legal obligation…an obligation that starts with licensing of a bank to operate in Tanzania, to an obligation that is to ensure that the bank complies with the laws and regulations of the country,” said consultant Richard Mushi of Economic and Business Foundation (T) Limited.

“If the bank operated abnormally by diverting from some basic banking operations, principles or standards, then that was a clear indication of abnormal business going on. And BoT had no eyes to see that!”

The FBME fiasco has also raised eyebrows on the reliability of BoT’s monetary policy positions and directives and their implications on the national economy. BoT has vehemently denied any wrongdoing and dismissed as uncalled for the views expressed on FBME that has operated under its watch for 11 years.

Dr Donald Mmari of Policy Research for Development (Repoa) said that if any bank disaster happens and people lose their deposits, it may lead into panic and distrust of the banking system and its regulatory agencies.

He said it was upon regulatory agencies to tighten the scrutiny of applications for licences as well as to undertake constant monitoring of their operating behaviours and business conduct.

“If banks are not properly scrutinised before they are licensed and during operations, some of them can be used to launder money or to bring into the economy money flows that can potentially distort the economy,” he told The Citizen on Sunday yesterday.