Money laundering control in Tanzania

Abstract

Purpose This paper aims to examine how banks in Tanzania have been vulnerable to money laundering activities and how the banking institutions have been implicated in enabling or aiding the commission of money laundering offences, and highlights the banks’ failure or inability to prevent, detect and thwart money laundering committed through their financial systems. Design/methodology/approach The paper explores Tanzania’s anti-money laundering law and analyzes non-law factors that make the banks exposed to money laundering activities. It looks at law-related, political and economic circumstances that impinge on the banks’ efficacy to tackle money laundering offences committed through their systems. The data are sourced from policy documents, statutes, case law and literature from Tanzania and other jurisdictions. Findings Both law-related and non-law factors create an enabling environment for the commission of money laundering offences, and this exposes banks in Tanzania to money laundering activities. Some banks have been implicated in enabling or aiding money laundering offences. These banks have abdicated their obligations to fight against money laundering. This is attributed to the fact that the banks’ internal anti-money laundering policies, regulations and procedures are inefficient, and Tanzania’s legal framework is generally ineffective to tackle money laundering offences. Originality/value This paper uncovers a multi-faceted nature of money laundering affecting banks in Tanzania. It is recommended that Tanzania’s anti-money laundering policy should address law-related, political, economic and other factors that create an enabling environment for the commission of money laundering offences. Tanzania’s anti-money laundering law should be reformed to enhance its efficacy and, lastly, banks should reinforce their internal anti-money laundering policies and regulations and policies.

Global Anti-Money Laundering and Combating Terrorism Financing Regulatory Framework: A Critique

“…Due to technological innovations that enable instant international and local bank transfers, at this stage regulators can fail to detect and or investigate possible money laundering issues (Whisker and Lokanan 2019;Dumitrache and Modiga 2011). Launderers can opt to use parallel banking systems, such as Hawala/Hundi and illegal international money transfers (Mniwasa 2019;Papanicolaou 2015) if they are determined to cover their trails.…”

“…Some of these factors included failure of domestic regulations to deal with challenges of increased cross-border transactions, globalisation and diaspora remittances, amongst others (Sujee 2016). Associated money laundering approaches adopted at the national or community levels without regional and international support have limited influence (Mniwasa 2019; Sujee 2016). The coordinated approach envisaged in the international bodies helps in addressing the challenges at the global level.…”

Anti-money laundering and customer due diligence: empirical evidence from South Africa

“…The frequency of updating a customer profile should be in line with the financial institution’s customer acceptance and ML risk policy (Cindori and Petrovic, 2018; Viritha and Mariappan, 2013). Undoubtedly, the categorisation of customers helps financial institutions to monitor account transactions and activities (Mniwasa, 2019; Christie, 2018; Ferwerda, 2009). In this regard, proper risk profiling should be done first.…”

“…Undoubtedly, the categorisation of customers helps financial institutions to monitor account transactions and activities (Mniwasa, 2019;Christie, 2018;Ferwerda, 2009). In this regard, proper risk profiling should be done first.…”

“…Comparing the 2009 and 2021 mutual evaluation reports, South Africa progressively made concerted efforts to ensure compliance with the 40 FATF recommendations. Clearly, the existence of a legal framework does not guarantee its effectiveness or adequacy (Mniwasa, 2019; Maguchu, 2018; Sujee, 2016).…”