Institutionalizing the fight against money laundering in Tanzania: the potential, limitations and challenges
| DOI | https://doi.org/10.1108/JMLC-07-2021-0083 |
| Published date | 10 September 2021 |
| Date | 10 September 2021 |
| Pages | 792-832 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Eugene E. Mniwasa |
Institutionalizing the fight against
money laundering in Tanzania:
the potential, limitations
and challenges
Eugene E. Mniwasa
Department of Management Sciences, Institute of Finance Management,
Dar Es Salaam, United Republic of Tanzania
Abstract
Purpose –This paper aims to examine the authorities tasked to fight against money laundering in
Tanzaniaand appraise the efficacy of the country’s anti-money institutionalframework to tackle the problem.
Design/methodology/approach –The paper draws on a qualitative researchand data generated from
the analysis of documentary materials. It surveys the anti-money laundering (AML) law in Tanzania to
describe the legal and institutional frameworks for tackling money laundering. It explores law-related and
non-law aspects to interrogate and appraise the efficacy of Tanzania’s AML law and authorities. The
qualitativedata were generated using the thematic content analysis technique.
Findings –The law in Tanzania establishes authorities and vests them with powers to combat money
laundering. The authorities, which are part of Tanzania’s AML institutional framework, have been
instrumental in combating money laundering. Nevertheless, several law-related and non-law factors
emasculate the efficacy of the AML law and authorities in Tanzania. Some political and economic factors
wear off the effectiveness of the country’s AML institutional framework. The transnational nature and
complexityof money laundering overwhelm the capacity of the AML authorities in Tanzania.
Practical implications –The paper provides usefulinsights on money laundering and the legal regime
to counteract the scourge in Tanzania which sets up the country’s AML institutional framework. It raises
some issues for researchers,policymakers and law enforcers who can re-examine the problem and revisit the
law and re-evaluate authorities and propose measures that will enable the government to reinforce the
country’s AMLregime. The paper makes a case for the government to implement the reforms of the country’s
AML policy, legaland institutional frameworks.
Originality/value –The paper investigates issues relating to money laundering and its control in
Tanzania beyond the legal perspectiveto uncover limitations and challenges that emasculate the efficacy of
the AML authorities in the Tanzaniancontext. The issues examined in this paper are not unique to Tanzania
and, hence,have relevance to other jurisdictions in sub-SaharanAfrica.
Keywords Challenges, Institutions, Tanzania, Potential, Money laundering, Limitations
Paper type Research paper
1. Introduction
Economic crimes including corruption, tax evasion, misappropriation and embezzlement of
public funds and property, poaching, traffickingof wildlife products, trafficking of narcotic
drugs and psychotropic substances, smuggling of persons, trading in counterfeited and
The author would like to thank three anonymous reviewers who read and commented on the manuscript.
Their comments on the operation of the anti-money laundering in Tanzania were very insightful.
In conducting the research the author did not receive funding from any person, entity, or organization.
JMLC
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Journalof Money Laundering
Control
Vol.25 No. 4, 2022
pp. 792-832
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-07-2021-0083
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
pirated commodities, smuggling of licit and illicitmerchandise and racketeering have been
common phenomena in Tanzania over the past few decades (Mniwasa, 2015). Criminals
commit these crimes parallel to laundering of proceeds generated from those unlawful
activities. A wide range of factors drive those crimes and money laundering activities in
Tanzania. Money launderingand its predicate crimes have had adverse effects onTanzania
and its economy and people.The Government of Tanzania (GoT) has enacted laws to control
money laundering and its predicate crimes. The anti-money laundering (AML) law in
Tanzania, which has evolved for several decades, provides for the establishment of
authorities and vests them with powers to counter money laundering (Mniwasa, 2020).
These authorities have been instrumental in combating money laundering. Despite the
enactment of the law and the establishment of the AML authorities,several law-related and
non-law factors undermine the efficiencyof the AML institutions in Tanzania. These factors
wear off the capacity of such institutions totackle money laundering and make the task of
countering the scourgea challenging one.
The objectives of this article are: to describe, briefly, the AML legal framework in
Tanzania; to examine the authoritiesand agencies tasked to fight against money laundering
in Tanzania; to appraise the efficacy of the AML institutional framework in Tanzania; and
to propose some measuresto address the deficiencies identified with a view to enhancing the
AML legal and institutionalframeworks. The main questions addressed are: first, what does
the AML legal frameworkin Tanzania consist of?; second, which authorities in Tanzaniaare
mandated to tackle money laundering?; and, third, what is the potency of the authorities
tasked to fight against money laundering in Tanzania and what challenges undermine the
efficiency of those authorities?
The article draws on a qualitative library-based qualitative research. It appliesthe “law-
in-books”approach to explore and describe the AML legal and institutional frameworks in
Tanzania. The article highlightssome incidents on which the AML law has been applied to
deal with money laundering and its predicate crimes. It also uses the “law-in-action”
approach to interrogate and appraise the efficacy and limitations of the AML legal and
institutional frameworks in Tanzania and uncover challenges encountered in countering
money laundering by Tanzania’s authorities. The article uses information generated from
purposively selected materials –international legal instruments, principal legislation,
judicial decisions, policy documents, government reports, government records, newspaper
reports and online materials. The information collected from the above materials were
transcribed and organized according to their sources. Once organized the transcripts were
then analyzed and thematically coded to respond to the research questions and with
particular focus on: the salientfeatures of money laundering in Tanzania; the law applied to
curb money laundering in Tanzania; the authorities established in Tanzania to tackle the
problem; and the robustness of the authorities in Tanzania in fighting against money
laundering and the limitations and challenges that undercut the efficacy of these
institutions. Excerpts from the transcripts, table and diagram have been used to represent,
describe, elaborateor illustrate points.
The remainder of the article is structured as follows:Section 2 reviews the literature that
has looked at issues concerning money laundering and its control in Tanzania. Section 3
defines money laundering in Tanzaniaand describes some of its salient features, stages and
effects. Section 4 surveys the law and the AML institutionalframework in Tanzania. Section
5 discusses the potential of the AML authorities in Tanzania and some limitations and
challenges involved in countering problem. Section 6 presents the concluding remarks and
proposes some measures that canbe implemented to address the deficiencies in Tanzania’s
AML authorities identifiedin this article.
Money
laundering in
Tanzania
793
2. Review of literature
Money laundering and its predicate crimes are tribulations that have been afflicting many
countries in sub-Saharan Africa (SSA) for many years (Schlenther, 2013;Markovska
and Adams, 2015;Oke, 2016;Kayuni,2016;Akuey, 2018). A wide range of economic crimes
committed in these countries and abroad generate funds that subsequently are laundered
within and outside the SSA. These countries have enactedlaws that are used to combat the
crimes. The laws prescribe mechanisms and vest authorities with powers to tackle money
laundering and the associated criminal activities (Mwenda, 2006;Moshi, 2007;Okogbule,
2007).
In many jurisdictions in the SSA, the AML institutions have been very instrumental in
combating money laundering. The efficacy of these institutions is undermined by many
factors such as inadequacies of the laws, limitations in the institutions and environments
under which these institutions are operating (Simwayi and Haseed, 2012;Maguchu, 2017;
Gikonyo, 2018). In other words, there are shortcomings that are inherent in the AML laws;
there are intrinsic limitationsthat impinge on the efficacy of the AML institutions; and there
are external factors that emasculate the efficacy of the AML laws and institutions in these
countries. Additionally, some systemic challenges, caused by political, economic and other
factors, contribute to undermining the efficacy of the AML legal and institutional
frameworks in many countries in the SSA (van Donge, 2009;Otusanya and Lauwo, 2012;
Dusabe, 2016).
There are commonalities among the countries in the SSA in termsof the manifestations
of money laundering activities and the features of the AML laws and institutions.However,
the efficacy of the AML laws and efficiency of the institutions in these countries to counter
money laundering and address challenges that affect them differ from one jurisdiction to
another. This is due to, among other factors, the political, economic and social situations
prevailing in individual SSA countries. It is imperative, therefore, to investigate the
situations prevailing in individual SSA countries. To understand the efficacy of the AML
institutional framework in Tanzania, one has to look into the money laundering situation,
the AML law that establishes those authoritiesand the environment in which the country’s
AML regime operates.
Like in other jurisdictions in the SSA,there is literature in Tanzania that has looked into
issues relating to money laundering and the country’s AML regime and described the
effectiveness and limitations of such regime to address the problem. Kapinga (2010),
Mniwasa (2015,2020), Kaniki (2015),Moshi (2012) and Komba (2020) have explored issues
related to economic crimes includingmoney laundering and the legal framework for curbing
these crimes in Tanzania. The above authors have shown that economic crimes, some of
which are presently designated as predicate crimes of money laundering, started to
proliferate in Tanzania fromthe 1980s and expanded further in the 1990s. The proliferation
of criminal activitieswas partly a result of the economic slump that Tanzaniaexperienced in
the 1980s and the subsequent economic reforms that the GoT has been implementingfrom
the second half of the 1980s to the present. These factors contributed to opening many
avenues for criminals to carry out their illegal activities and generate colossal illicit funds
that are later laundered. The authors have documented some negative effects of money
laundering and its predicate crimes. The above authors have also explored the legal
framework for countering money laundering in Tanzania and highlighted some
inadequacies and limitationsof the country’s AML legal regime.
To counter the money laundering scourge and to ameliorate its effects on Tanzania, its
economy and people, the GoT has enacted laws and set up authorities to deal with the
problem. Besides the GoT’s desire to tackle the crimes, the enactment of the AML law and
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