Tanzania to close down nearly 150 forex bureaus

So far the central bank has revoked licences for 110 bureaux de changes.

IN SUMMARY

  • The Tanzanian central bank revised the rules for operating retail foreign exchange bureaus in the country in June 2017, in a deliberate move to crack down on money-laundering.
  • It raised minimum capital requirements, suspended licensing of new forex bureaus and required existing foreign currency retailers to apply for new licences.
  • At least two-thirds of the required minimum capital should be in the form of cash as working capital.

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Tanzania targets to shut down about half of the country's 297 forex bureaus, the central bank said Tuesday.

The Bank of Tanzania (BoT's) director of banking supervision, Mr Eliamringi Mandari, said 110 bureaux de changes have closed shop as at the end of January this year.

BoT has at the same time relicensed 71 forex traders with another 65 currently under review.

"Our expectation is that when the exercise is completed, at least 50 per cent of the bureaux de changes would have stopped operations," Mr Mandari said in a press conference.

He said the audit of the forex bureaus is expected to be completed in two weeks.

Tanzania has been tightening forex controls to tackle financial crimes and protect the local currency.

Over 110 foreign exchange bureaus in Tanzania close shops as new licensing requirements bite. 

New capital requirements

In June 2017, BoT raised the minimum capital requirements for the forex bureaus, placed a moratorium on new operations and required all existing traders to apply for new licences.

The capital levels were revised to Tsh300 million ($132,000) from Tsh100 million ($44,000) for bureaus dealing with spot foreign exchange transactions. For those additionally dealing with money transfers the minimum threshold was set at Tsh1 billion ($440,000) up from Tsh250 million ($110,000).

The regulator has also ordered owners of the bureaus to authenticate the source of funds invested in their businesses and doubled the non-interest bearing deposit to $100,000. The deposit is held by BoT as security for money transfer transactions.

"Some could not meet the new capital requirements while others failed to prove whether the amount they wanted to inject in the new capital was genuine or not," Mr Mandari said.

-Reporting by Rosemary Mirondo.

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