Tanzania

Half of Tanzania's forex bureaus expected to close as new rules take effect

Bank of Tanzania headquarters in Dar es Salaam. FILE PHOTO | NMG
Bank of Tanzania headquarters in Dar es Salaam. FILE PHOTO | NMG 

Mtwara

Tanzania's central bank said Tuesday that the number of forex bureaus that have so far closed shops in the country has risen to 110 as of January 31, this year.

A total of 71 bureaux de changes have at the same time been relicensed to continue operations, the Bank of Tanzania’s (BoT) director of banking supervision, Mr Eliamringi Mandari, said.

Relicensing applications for some 65 bureaux de change are still under review, awaiting the BoT’s decision to renew or revoke their licences..

"Our expectation is that when the exercise is completed, at least 50 per cent of the bureaux de changes would have stopped operations," he told journalists here, noting that the exercise was ongoing, and expected to be completed within two weeks.

Before commencement of the relicensing, Tanzania had a total of 297 forex bureaus

The Tanzanian central bank revised the rules for operating retail foreign exchange bureaus in the country in June 2017, in a deliberate move to crack down on money-laundering.

In the revised rules, the BoT raised minimum capital requirements, suspended licensing of new forex bureaus and required existing foreign currency retailers to apply for new licences.

New capital requirements

“The minimum capital thresholds have been revised from TSh100 million (Sh4.5 million) to TSh300 million (Sh13 million) for class A (bureaux de change) and from Sh250 million to Sh1 billion for class B,” the bank said in a circular dated June 21.

Class A bureaux de change are licensed to deal with spot FX transactions, while class B bureaux are licensed to deal with spot foreign currency transactions and money transfers.

According to the BoT, at least two-thirds of the required minimum capital should be in the form of cash as working capital.

The BoT 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 at the 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," he said.

According to him, a majority of the remaining bureaux are in Dar es Salaam, some in Arusha, Kilimanjaro while the rest are scattered across the country.