Bank of Tanzania warns lenders over fake currency deposits

The Bank of Tanzania. PHOTO | FILE 

By JASTON BINALA

In Summary

• Arusha, Kilimanjaro, Kagera and Kigoma identified as the regions with the highest incidence of counterfeit currency notes.
• Kigoma Region shares borders with the Democratic Republic of Congo, Burundi and Rwanda, while Arusha and Kilimanjaro share a border with Kenya. Kagera region shares borders with Rwanda and Uganda.
• Commercial banks are now required to sort and separate good currency from counterfeit and to remove soiled notes, instead of leaving that duty to the central bank, as was the practice in the past. 

Some commercial banks in Tanzania have been depositing counterfeit currency notes according to the central bank.

Bank of Tanzania Operations Department manager at the Dodoma Branch Harry Mwansembo said several banks declared high deposit amounts that were be found to be as much as Tsh2,000,000 ($910) short of the declared amount, partly due to fake currency.

“In addition to outright shortages where a certain amount of notes is believed to have been pulled out of the deposit bundle, another problem is inclusion of counterfeits in the bundles deposited,” said Mr Mwansembo, adding that the problem of counterfeit notes, particularly the larger denominations, was serious and that the fake notes appear to be printed by crooks in neighbouring countries. 

He identified Arusha, Kilimanjaro, Kagera and Kigoma as the regions with the highest incidence of counterfeit currency notes.

Shared borders

Kigoma Region shares borders with the Democratic Republic of Congo, Burundi and Rwanda, while Arusha and Kilimanjaro share a border with Kenya. Kagera region shares borders with Rwanda and Uganda.

Commercial banks are now required to sort and separate good currency from counterfeit and to remove soiled notes, instead of leaving that duty to the central bank, as was the practice in the past. 

In addition to that requirement, BoT now requires commercial bank staff to witness the physical counting of their deposits to verify the amounts in their presence, Mr Mwansembo said.

By December 31, 2015  the banking sector was made up of 36 commercial banks and 26 financial institutions — 12 community banks, three financial institutions, three financial leasing companies, three microfinance banks and two credit reference bureaus. The branch network stood at 731 branches