12 August 2014

Tanzania Now Off the Global Dirty Money Watchdog Hook

ONCE regarded as a place with laxity in controlling illicit money, Tanzania has been removed from the bad books of global dirty money watchdog, a Paris based Financial Action Task Force.

In its recent statement, FATF said Tanzania alongside other countries including East African Community neighbour, Kenya, have been dropped from a list of monitored countries.

The FATF identified jurisdictions which have strategic weaknesses in their anti-money laundering and counter terrorist financing (AML/CTF) framework. These countries have developed an action plan with the FATF to address these AML/CTF weaknesses.

"The FATF recognised that Tanzania, Kenya, Kyrgyzstan, Mongolia and Nepal made significant progress in improving their AML/CTF regime and will therefore no longer be subject to the FATF's monitoring process," it said in a recent statement.

Speaking in Dar es Salaam last week the acting Commissioner of Treasury's Financial Intelligence Unit, Onesmo Makombe said the achievement has been made possible after years of hard work following poor reports that ranked the country lowly between 2006 and 2009.

"Since our establishment in 2007, we have done a very good job which has seen the country get out of the near blacklisted part by the Financial Action Task Force (FATF) in 2009," Mr Makombe said.

He unveiled that after an audit conducted by the FATF earlier this year, it was considered that the country's regulatory mechanism to curb money laundering has greatly improved. "This is very good to us in terms of attracting foreign investment and donor trust," Makombe noted.

As part of Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), Tanzania subscribes to 16 benchmarks set up by FATF which gave the country's regulatory framework poor performance in 2009 necessitating sweeping changes in 2010.

The FIU acting Commissioner further noted that despite having the 2006 Anti Money Laundering Act and establishment of FIU management in 2007, laxity was still rife and the international community feared that the country's 5bn US dollars banking industry was rife with laundered cash.

He dismissed criticism against FIU for delays in concluding culprits of money laundering and prosecution as unrealistic because their institution's role is simply administrative.

"We collect and analyze information which we forward to state organs including Prevention and Combating of Corruption Bureau (PCCB), Tanzania Revenue Authority and Tanzania Police Force for action," said the FIU acting Commissioner.

Globally, there are four types of FIUs which include administrative, investigative, judicial and hybrid which perform different tasks. The country's FIU is purely administrative.

Although the country has been elevated by FATF in its conduct of addressing illicit money, a few unconcluded cases still raise eyebrows. Over a month ago, Police at Julius Nyerere International Airport arrested an unidentified suspects with over 230,000 US dollars in sacks which they tried to smuggle to China.

Tanzania Police Force Spokesperson, Advera Senso said the culprits are still in custody while investigations continue but so far no update has been provided.

"We will give details of the culprits after making progress in preliminary investigations," Ms Senso said as word circulates that a popular Dar es Salaam home appliances importer is behind the dollars haul.

Earlier this year, Washington based Global Financial Integrity said in a report that illicit flows and secretive practices are robbing many developing nations, particularly in Africa, of riches that could go towards development and stability.

GFI with a reputation for analyzing large sums, believe developing countries lose about 424 billion US dollars each year when importers and exporters mislead governments about the value of goods and services, according to a new report.

The report estimates that the Tanzanian government misses out on about 248 million US dollars per year in tax revenue from mining companies as a result - a substantial amount for a country in need of funds for development.

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