Where money launderers like to invest their ill-gotten gains
Dar es Salaam. Real estate, bureaux de change, microfinance activities, precious metals and vehicle dealerships harbour the highest money laundering risk in Tanzania, a new report shows.
These channels are easy to penetrate as one can invest money without being regulated, according to the 2016 National Money Laundering and Terrorism Financing Risks Assessment Report published earlier this month by the Financial Intelligence Unit (FIU) of the Ministry of Finance and Planning.
It shows that it is relatively easy to launder money by establishing housing projects, lending, selling vehicles or dealing in gemstones.
The report has further revealed that the areas are mostly targeted because there are no value or transaction limits as they are cash intensive.
Casinos and other gaming activities; notaries and other independent legal professionals and micro credit companies have been rated as medium to high threats.
Accountants and auditors; money or value transfer services and electronic money issuers are rated as medium threats, while securities, insurance, auctioneers, dealers in works of art, saccos and informal financial groups are low threats.
The report calls for the amendment of the Anti-Money Laundering Act, 2006 (AMLA), as amended in 2012, and the Anti-Money Laundering and Proceeds of Crime Act, 2009 (AMLPOCA) to address the deficiencies. The amendment will allow implementation of a risk-based approach in combating the threats.
It will also ensure that misuse of technology in money laundering or terrorist financing schemes is prevented.
The report was published in the wake of a number of measures the government has taken to combat money laundering, including closure of bureaux de change, particularly in Dar es Salaam and Arusha. Finance and Planning minister Philip Mpango said last month that most of the forex shops that had been closed down were being used as agents of money laundering and capital flight.
The government has also enacted the Microfinance Act, 2018 which requires all lenders to be licensed.
Individual banks and mobile money networks have also established inhouse anti-money laundering compliant measures.
Real estate
Despite the comprehensiveness of the anti-money laundering (AML) legal framework, the real estate sector’s vulnerability is rated high because of lack of supervision or oversight of the sector for AML purposes.
The sector also has weak entry controls, low anti-money laundering knowledge among staff and lack of suspicious activity monitoring and reporting.
Precious metals
Criminals also invest their illegal proceeds in precious metals and stones, according to the report.
“In Tanzania, it is possible for anyone to purchase precious metals and stones in big quantities without raising any attention, even from relevant authorities,” it says.
“The use of cash is also very prevalent in transactions to buy and sell precious metals and stones.”
Precious metals and stones are quite liquid and it is common for people in Tanzania to make long-term investments or savings in these items, rather than put the money in the bank.
Vehicle dealerships
According to the report, money laundering vulnerability in the motor vehicle dealership area is high as it has no regulator.
Banking
Money laundering threat is rated high mainly because the banking sector remains the prime target in laundering illicit proceeds.
