Financial Crime World

Financial Exclusion Plagues Remote Areas in Tanzania

Kigoma/Tanzania - A staggering majority of Tanzanians living in remote areas are without access to basic financial services, leaving them vulnerable to poverty and financial exclusion.

The Reality of Financial Inaccessibility

According to the Household Budget Survey of 2000/01, a significant proportion of the population:

  • 18.7% live below the national food poverty line and lack access to banking services.
  • 35.7% live below the national basic needs poverty line and lack access to banking services.
  • Only 6% of households have one or more members with a bank account.
  • Just 4% participate in informal savings groups.

Consequences of Financial Exclusion

The lack of financial services has far-reaching consequences, including:

  • Limited access to credit, insurance, and other essential financial products and services.
  • Insignificant levels of savings.

Regulatory Framework Lacking

Tanzania lacks a regulatory framework for alternative money remittance systems, including:

  • Expedited mail services
  • Money transfers by bus operators
  • Money transfer by cell phones
  • Hawala
  • Cyber transactions

This lack of regulation poses significant risks to the country’s financial system.

Open Door Policy Raises Concerns

The government’s open door policy on foreign direct investments (FDIs) has raised concerns about:

  • The potential for proceeds of crimes or terrorist financing from outside Tanzania to be laundered in the country.

National Identity Cards a Necessity

The lack of National Identification Cards (NICs) poses significant challenges for:

  • Know Your Customer (KYC)
  • Customer Due Diligence (CDD)
  • Establishment of audit trails

While Zanzibar introduced NICs in 2005, the United Republic of Tanzania has yet to implement this critical measure.

Lack of Knowledge and Awareness

Many Tanzanians are unaware of:

  • The evils of money laundering and its effects.
  • This lack of knowledge and awareness hinders efforts to combat the problem and highlights the need for increased education and public awareness campaigns.

Escalating Predicate Offenses

The country has seen an escalation of predicate offenses, including:

  • Bank robberies
  • Car thefts
  • Prostitution
  • Cell phone thefts
  • Corruption
  • Counterfeits
  • Illicit trafficking of narcotics and psychotropic substances

These crimes generate dirty money and pose significant risks to the financial system.

Porous Borders and Unstable Neighboring Countries

The country’s porous borders with neighboring countries, some of which are economically, socially, and politically unstable, poses a significant threat to the country’s financial security.

National AML/CFT Strategy

In light of these challenges, the National AML/CFT strategy has been developed to address these issues and ensure that Tanzania is in compliance with international standards on anti-money laundering and combating the financing of terrorism. The strategy sets out key objectives, strategies, and action plans needed to deliver results and build on progress already made.