In Summary
- As of December 2016, there were 297 Bureau de Change and nine branches, hence making the total of 306 outlets countrywide.
Dar
es Salaam — The Bank of Tanzania (BoT) will start re-licensing of
bureaux de change at the end of this month after suspending the exercise
for at least nine months due to money laundering concerns.
Money laundering is the process of disguising the proceeds of crime and integrating it into the legitimate financial system.
It is a form of Illicit Financial Flow (IFF), an illegal movement of money/capital from one country to another.
The Organisation
for Economic Co-operation and Development (OECD) estimates that
developing countries lose $1 trillion each year due to factors related
to IFF, including poor governance and lax regulations.
The government
through the deputy minister for Finance and Planning, Dr Ashatu Kijaji,
said in parliament in February 2017 that it was closely monitoring
transactions in bureaux de change with a view to ensuring that only
'clean' money is transacted.
Four months later, the BoT revised the rules for operating retail foreign exchange bureaus in an anti-money laundering drive.
The central bank
tightened rules governing the ownership and operation of forex bureaus
to curb capital flight and money laundering by raising the minimum
capital requirements for bureaux de change.
It also suspended
licensing of new bureaux de change and required those which were in
operation until last year to apply for new licences.
Under the new
licensing rules, the minimum capital thresholds was raised to Sh300
million from Sh100 million for Class A (bureaux de change) and to Sh1
billion from Sh250 million for Class B.
However, the BoT
director for banking supervision, Mr Kened Nyoni, told The Citizen last
week that the re-licensing exercise was being finalised and would resume
by the end of the month.
"The goal is to open the door for new applications once the re-licensing exercise is fully concluded," he said.
As of December 2016, there were 297 Bureau de Change and nine branches, hence making the total of 306 outlets countrywide.
Mr Nyoni said during the period, the central bank BoT revoked licenses for 144 forex shops.
"Furthermore, 44
bureaux de change merged and became branches of re-licensed bureaus
while three branches closed their operations," said Mr Nyoni.
According to Mr Nyoni, so far, Tanzania has a total of 109 bureaux de change with 53 branches.
"This means, we now have total of 162 money changing outlets as compared to 306 outlets in 2016," he said.
Out of the outlets,
100 bureaux and 50 branches are located in Tanzania Mainland while nine
bureaux and three branches are located in the semi-autonomous islands
of Zanzibar.
After issuing new
rules in last June, the BoT gave the operators a six-month ultimatum
(until December 31, 2017) to reapply for business licenses under the new
arrangements.
Apart from raising the minimum capital, the BoT also increased the non-interest bearing deposit from $50,000 to $100,000.
The new operational
conditions also require that no person is allowed to have interest in
more than one bureau and that at least two-thirds of the required
capital should be in form of cash.
Similarly, bureaux
operators are obliged to demonstrate the authenticity of the source of
the funds that are to be invested in the bureaus as well as fit their
shops with CCTV cameras.
Some operators told
The Citizen in January that the reduced number of forex bureaux would
be a blessing in disguise to them, noting that it would result in
increased confidence among customers.
"The BoT had been
registering too many complaints relating to the conduct of business by
the bureaus in the country. The complaints mostly related to
irregularities such as theft and robbery involving customers who carry
cash in bulk after transacting at a bureau de change," said the managing
director of the Dar es Salaam-based FX Bureau de Change, Mr Sameer
Milo.
He added: "This is why some of us consider the new rules as good for the business."
According to him, allegations that some bureaux de change used engage in money laundering might also have some truth in them.
Another bureau de
change operator who sought anonymity said the seemingly relentless fall
in value of the national currency, which was witnessed in the past, may
also have had a direct or indirect bearing on the way the bureau system
operated.
"Since the
introduction of the Foreign Exchange Act in June 2015, volatility of the
local currency against most foreign currencies - mainly the US dollar -
has almost been curbed," he said.
Though the BoT is
yet to issue a statement on the role of curbing money laundering and
other forms of IFFs through bureaux of change, available data show that
the local currency has exercised enough resilience against the US dollar
during the past few months.
The local currency
depreciated by only 1.5 per cent to Sh2,276.9/Sh2,254 on May 28 this
year from Sh2,241.12/ Sh2229.05 on January 2, 2018.
During a similar
period last year, the Shilling lost by only 2.4 per cent against the
greenback when it exchanged for Sh2,240.3/Sh2,218.13 (in May 2017) from
Sh2,186.2/2,164.56 in January 2017.
Tanzania
What It Means for Tanzania's High Court to Lift Injunction Against Use of Online Content Regulations
The High Court of Tanzania in Mtwara Zone has removed from the court a case on the online content regulation filed by… Read more »
No comments :
Post a Comment