Tanzanian president John Magufuli. Picture: REUTERS
Tanzanian president John Magufuli. Picture: REUTERS

Dar es Salaam — Tanzania has tightened currency controls with new regulations on foreign exchange bureaus in its campaign against money laundering and currency speculation.

The new rules, published on Monday by the central bank, come months after the government revoked the licences of about 100 bureaus and temporarily shut a newspaper for using unofficial data on exchange rates.

President John Magufuli has said the central bank licensed too many bureaus and some of them breached laws.

The Tanzanian shilling has been broadly stable since the beginning of the year. Tthe IMF reported in April that the actual value of the currency was “broadly in line with fundamentals”.

But the IMF also warned of serious weaknesses in official data and said  some indicators point to slower economic activity than reported by the government.

Since February, when the bureaus were shut, commercial banks have conducted foreign currency trading.

The Bank of Tanzania governor said this month that due to the reduced number of exchange bureaus about $10m was traded daily by commercial banks, improving market transparency and hard currency inflows.

Regulations published on Monday  make it harder  exchange bureaus to operate, and will lead to more transactions shifting to commercial banks, said a foreign currency trader. They raise minimum capital for forex bureaus threefold, to 1-bn Tanzanian shillings ($435,104), and require bureaus to maintain working capital of at least 75% of paid-up capital.

The rules require shareholders, directors and heads of branches of exchange bureaus to pass a central bank “fit and proper person test” to be  approved for their positions. Bureaus must establish procedures to identify and report suspicious transactions to curb money laundering and terrorism financing.

Customers will also have to provide information on source or purposes of  foreign currency transactions.

The new rules are in line with Magufuli's close control of the economy. On taking office in 2015 he promised to tackle corruption. since then, he has faced domestic and international criticism for heavy-handed policies that slashed investment in the mining and agriculture sectors.

Donors and investors say the government’s economic and social interventions in the past few years were accompanied by increasing restrictions on the opposition and the media.

Reuters