Tanzanian Regulator Fines Equity, other banks for lax anti-money laundering standards

The Bank of Tanzania (BoT) revealed on Monday that it had fined five commercial banks over $800,000 (Ksh83,117,400) for breaching anti-money laundering rules. This is the latest in a series of moves aimed at tightening regulation in the financial services sector.

“For failure to conduct proper customer due diligence and file suspicious transaction reports to the (state-run) Financial Intelligence Unit (FIU)”, BoT said in a statement the fines were imposed.

Other banks that were fined for the same reason are I&M Bank (Ksh29,602,391), UBL Bank (Ksh14,688,039), Habib African Bank (Ksh7,908,944) and African Banking Corporation (Ksh6,552,130).

Equity Bank was fined Ksh26,212,500.

The regulator gave three months to the sanctioned banks to implement various anti-money laundering measures, which include taking disciplinary action against all staff members “who were involved in opening implicated deposit accounts contrary to KYC (know your customer) requirements”.

Ongoing Crackdown

Tanzania has tightened regulatory oversight over commercial banks and other financial institutions over the past few years.

The central bank last month gave all banks and financial institutions in Tanzania 90 days to establish primary data centres in the East African nation, saying it will impose hefty fines on lenders that fail to comply.

The country’s financial services sector, which is dominated by lenders like CRDB Bank and NMB Bank, has been hit by a spike in bad loans, which have stifled the growth of credit to the private sector.

In December, the International Monetary Fund said nearly half of Tanzania’s 45 banks were vulnerable to adverse shocks and risked insolvency in the event of a global financial crisis.

Tanzania’s central bank has revoked the licenses of at least nine banks since 2017, saying the move was aimed at safeguarding the stability of the sector.

The closure of the banks came after President John Magufuli ordered the central bank to take action against failing financial institutions.

Featured Image courtesy of Bank of Tanzania Website