Tanzania to close down nearly 150 forex bureaus

Wednesday February 07 2018
By The EastAfrican

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.


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.