Summary
- BoT undertook several measures to strengthen supervision of bureaux de change to enhance compliance with legal and regulatory requirements.
Bank of Tanzania (BoT) has teamed up with Tanzania Police Force to crackdown on a cartel of black market money dealers who have mushroomed in the country in recent days.
BoT Manager for Microfinance and Bureau de Change Supervision, Mr Victor Tarimu told The Citizen that the Central Bank has been receiving information from various sources about the existence of an informal foreign exchange market in the country.
In that regard, BoT has commenced working in collaboration with law enforcement organs to crackdown on the cartel that could significantly have a negative impact on the country's economy.
According to Mr Tarimu, BoT has directed law enforces including the Police Force to take legal measures against the culprit for violating the country's Foreign Exchange Act 1992.
"The informal forex trade is in violation of the Law, and those doing so are committing an offence. Therefore, law enforcement agents are supposed to take appropriate measures once established," he told The Citizen.
BoT undertook several measures to strengthen supervision of bureaux de change to enhance compliance with legal and regulatory requirements.
The measures included revocation of licenses of bureaux de change which were not complying with operational guidelines which In turn contributed to the stability of the shilling observed during the period.
Recently, the CRDB Bank opened special ATMs specifically intended for currency exchange in its Meru Branch in Arusha targeting travelers requiring foreign currency.
The BoT director of Finance Sector Supervision, Mr Jerry Sabi, said the new service would increase safety and security in the forex exchange business.
The 2019 Financial Sector Supervision Annual Report shows that there were five bureau de changes with 27 branches across the country.
Purchase of bureau de change foreign currency amounted to $197.18 million, while sales amounted to $86.98 million. The amount included $17.4 million and $13.2 million foreign currency purchased and sold in Zanzibar respectively.
The major sources of purchases were travelling abroad, which accounted for 77.29 percent followed by tourism accounted for 8.42 percent of total purchases.
This is compared to December 31, 2018 where a total number of bureaux de change in operation were 80 and total currency purchased amounted to $722.9 million while foreign currency sold amounted to $$415.2 million.
The government at the end February 2019 shut down all bureau de changes countrywide pending introduction of new rules and regulations as well as the punishment to be meted out on those found guilty of money laundering.
Money laundering is the concealment of the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses.
The forex shops are required to record identity details of persons exchanging money - including the source(s) and planned use of the foreign currency.
Contacted Police Force Spokesperson, Assistant Commissioner of Police (ACP) David Misime declined to comment on the matter since they were still investigating the issue.
"This is sensitive; we cannot make it public while perpetrators are still on the loose."
Black market forex traded is used not only by travellers and tourist, but by those seeking to take illegally earned money out of the country.
Tanzania lost around $8.9 billion in four decades in illicit financial flows (IFFs) which includes money laundering, trade misinvoicing tax evasion among others according to a Global Financial Integrity report on IFFs from Africa titled Hidden Resources for Development.
According to the Sanction Scanner, a financial crimes and anti-money laundering (AML) compliance organisation, on its website states that, there is complexity of regulations in different international jurisdictions, as forex trading does not have a single-center, a deficit occurs for money laundering in this sector. Many people use multiple currencies through multiple companies in forex trading.
Therefore, forex trading involves risks due to a number of difficulties in terms of tracking money. In addition, in forex trading, it is exposed to AML risks due to inequality between regulatory standards in different jurisdictions.
The differences in AML or CFT (Combating the Financing of Terrorism) regulations between countries and the lack of communication between international financial authorities create opportunities for financial criminals, the website states.
Moreover, forex trading offers some anonymity to traders, which provides an opportunity for financial criminals to perform money laundering activities. Financial criminals can perform transactions below the thresholds set by regulators anonymously, that is, they are not subject to Customer Due Diligence (CDD) processes, according to Sanction Scanner.
On the same note, a survey by The Citizen at the Dar es Salaam city Center including (Kariakoo and Posta) saw people lurking outside the bureau shops awaiting customers who were studying the daily exchange rates before approaching them with promise of a better deal.
One (anonymous) bureau de change owner whose business was closed in 2019 told The Citizen that after the government crackdown where all the shops were closed, he changed business because he could not afford the new regulation that required capital of Sh1 billion.
"There are people involved in the black market who approached me asking that I connect them with my former clients which I declined and they still went on through other means," he said.
He stressed that his refusal did not deter them from the illegal business. They move about the shop areas and when they see an undecided customer they use their own form of communication and quickly lure the customer to unknown destination for business.
According to him, a majority of people especially traders find it difficult to queue in the shops where they are asked for IDs or passports when exchanging money. "They prefer to change their money anonymously through illegal means and at cheaper costs," he said.
He said the culprits are even found at the airports where they lure either Tanzanians returning to the country or foreigners of cheaper exchange rates without the hustle of producing identification.
According to the new regulation, the Foreign Exchange Act (CAP. 271) made under section 5(a) and 7(1)) of the Foreign Exchange Bureau de Change regulations, 2019 of Part II Licensing and Capital requirements stipulate that 4(1) A person shall not engage in bureau de change business without a valid license issued by the Bank under these Regulations.
Section (2) a person who contravenes the provision of sub regulation (1) commits an offence and on conviction shall be liable to a penalty as provided under the Act.
Meanwhile owner of FX bureau that no longer operates Mr Sameer Milo said the new move by the government has enabled forex shops to be located even in remotes areas of the country.
"Previously people in remote areas had to travel to urban areas to access the service, but now the services are found in Banks which are scattered in the remote areas, "he said.
Since the government shut down the bureaux de change, the business was being undertaken by commercial banks, which have opened standalone bureau shops within their branches.
A resident of Dar es Salaam, Frank Mushi said he was recently approached by unknown people after he arrived in the city center
(Posta) to exchange US dollar currency to Tanzania Shilling and found the shops closed.
"Someone approached me and told me if I wanted the service I could get it at a cheaper rate and with no hustle, I quickly remembered someone had previously told me he tried the black market and was given fake currency, so I declined and walked away," he said.
While authorities are working towards cracking the black market cartel, ACT-Wazalendo's politician Saed Kubenea was September this year arrested and charged in Arusha court for failing to declare Sh28 million he was possessing while entering Tanzania illegally.
Mr Kubenea exited Tanzania and entered Kenya on September 3, this year, and returned to Tanzania two days later through the same route.
He was arrested at the border town of Namanga in Arusha Region, in possession of three currencies which, according to the prosecution he failed to declare at an official border crossing. The cash was $8,000, Ksh491,700 and Tsh71,000.
This story was produced by The Citizen. It was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher
No comments :
Post a Comment