Tackling money laundering in Tanzania: are private legal practitioners crime enablers or ineffectual and reluctant gatekeepers?
| DOI | https://doi.org/10.1108/JMLC-03-2020-0028 |
| Pages | 289-322 |
| Date | 06 June 2020 |
| Published date | 06 June 2020 |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Eugene E. Mniwasa |
Tackling money laundering in
Tanzania: are private legal
practitioners crime enablers or
ineffectual and reluctant
gatekeepers?
Eugene E. Mniwasa
Department of Management Sciences, The Institute of Finance Management,
Dar es Salaam, United Republic of Tanzania
Abstract
Purpose –This paper aims to examinethe money laundering vulnerability of privatelegal practitioners in
Tanzania, the involvementof these practitioners in money laundering activities and their role in preventing,
detectingand thwarting money laundering and its predicate crimes.
Design/methodology/approach –The paper applies the “black-letter”law research approach to
describe, examine and analyze the anti-moneylaundering law in Tanzania. It also uses the “law-in-context”
research approach to interrogatethe anti-money laundering law and to provide an understanding offactors
impacting on the efficacyand readiness of private legal practitioners in Tanzaniato tackle money laundering.
The review of literature and analysis of statutory instruments and case law, reports of the anti-money
laundering authorities and agencies and media reports-generated data are used in this paper. This
informationwas complemented by data from interviews of purposively selected privatelegal practitioners.
Findings –Private legal practitioners in Tanzania are vulnerable to money laundering. There is an
emerging evidence that indicates the involvementof some private legal practitioners in the commission of
money launderingand/or its predicate crimes. The law designates the legal practitionersas reporting persons
and imposes on the obligationto fight against money laundering. Law-relatedfactors and practical challenges
undermine the capacity of the legal practitioners to curb money laundering. Additionally, certain hostile
perceptions contribute to the legal practitioners’unwillingness, indifference or opposition against the fight
againstmoney laundering.
Research limitations/implications –The paper underscoresthe need for Tanzania to reform its policy
and legal frameworks to create enabling environment for anti-money laundering gatekeepers, including
private legal practitionersto partake efficiently in the fight against money laundering. It also underlinesthe
importance of incorporatingthe principles that govern the private legal practise to enablethe practitioners to
partake effectivelyin tackling money laundering.
Originality/value –This paper generates useful informationto private legal practitioners, policy makers
and academicians on issues relating to money laundering and its control in Tanzania and presents
recommendationson possible policy and legal reforms that can be adopted andapplied to augment the role of
the legal practitionersin Tanzania to combat money laundering.
Keywords Tanzania, Money laundering, Gatekeepers, Law, Private legal practitioners
Paper type Research paper
The author would like to thank anonymous reviewers who read the original manuscript and provided
useful comments.
In conducting the research, the author did not receive any financial support from any third party.
The author declares further that there is no conflict of interest in the research.
Money
laundering
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Journalof Money Laundering
Control
Vol.24 No. 2, 2021
pp. 289-322
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-03-2020-0028
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
1. Introduction
This article describesthe money laundering vulnerability of private legal practitioners [1]in
Tanzania [2], their involvement in money laundering activities and their role in fighting
against money laundering. The anti-money laundering (AML) law in Tanzania imposes
obligations on lawyers, notaries and independent legal professionals to counter money
laundering. The article explores factors that affect the capacity and readiness of the legal
practitioners to perform their obligations prescribed in the law. As will be demonstrated
later, in Tanzania, like in many jurisdictions, terrorism and financing of terrorism are
predicate offences of money laundering. Accordingly, the discussion on money laundering
encompasses the examination of financing of terrorism. And, the examination of the AML
law will embodies theanalysis of the counter terrorist financing (CTF) law.
While authors, including Mwema (2001),Bagenda (2003) and Mniwasa (2004), have
examined money laundering and its control in Tanzania before the enactment of the AML
Act 2006, this article looks at the Tanzania’s AML legal regime established after the
enactment of the Act [3]. Additionally, the article incorporates provisions of the subsidiary
legislations enacted subsequentto the enactment of the above Act. This article builds on the
previous literature, including Moshi (2008),Kapinga (2010) and Mniwasa (2015), that has
looked at issues relating to money laundering and its control generally, and it focuses on
examining the role of private legal practitioners in Tanzania in fighting against money
laundering and financing of terrorism. Whereas the previous literature has highlighted on
the obligations of legal practitioners to tackle money laundering superficially, this article
explores these issues in detail. The previous literature on the compliance of legal
practitioners to the AML law in Tanzania is sketchy and has not examined the matter from
the international law perspective. Contrary to the previous literature on money laundering
and its control in Tanzania which has focused on law-related issues, this article explores
both law-related and non-law aspects of money laundering and its control. Further, the
article discusses some challengesthat face the legal practitioners in Tanzania in performing
their obligations prescribedin the AML law.
This article, which draws on data generatedfrom the analysis of documentary materials
and interviews of privatelegal practitioners [4], addresses the following main questions:
Q1. What is the vulnerability of private legal practitioners in Tanzania and the
involvement of these professionals in the commission of money laundering
offences?
Q2. How does the AML law in Tanzania enjoin private legal practitioners in the fight
against money laundering offences and what is the efficacy of these practitioners
tackling the problem?
Q3. Which factors affect the capacity and willingness of private legal practitioners in
Tanzania to curb moneylaundering offences?
Following this introductory section, the article is organized as follows: Section 2
conceptualizes money laundering and describes its key features and effects on the legal
sector and legal practitioners. Section 3 describes the money laundering vulnerability of
private legal practitioners in Tanzania and their involvement in money laundering
activities. Section4 analyzes the provisions of the AML Act and the Prevention of Terrorism
Act in Tanzania that impose obligations on private legal practitioners to fight against
money laundering. Section 5 unveilssome factors that affect the capacity and willingness of
private legal practitioners in Tanzania to perform their obligations prescribedin the law to
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counter money laundering. Section 6 concludes the article and proposes some measures to
address the challengesidentified in the previous sections.
2. Money laundering and lawyers, notaries and independent legal
professionals and the gatekeeping obligations
In Tanzania, Section 2 of the AML Act [5]defines “money laundering”as the engagement,
directly or indirectly, in the conversion, transfer, concealment,disguising, use or acquisition
of money or property known to beof criminal origin and in which such engagement intends
to avoid the legal consequence of the commission of offences from which the money or
property was generated. Section 12 of the Act describes further acts that constitute money
laundering, namely:
engaging, directly or indirectly, in transactions that involve money or property that
are proceeds of crime;
converting, transferring, transporting or transmitting proceeds of crime for the
purposes of concealing or disguising the illicit origin of the property, or of assisting
a person involved in the commission of such crime to evade the legal consequences
of a predicate offence;
concealing, disguising or impeding the establishment of the source, location,
disposition, movement or ownership of proceeds of crime;
acquiring, possessing, using or administering proceeds of crime; and
participating in, associating with, conspiring to commit, attempting to commit,
aiding and abetting or facilitating and counselling the commission of any acts that
constitute the offence of money laundering.
The provisions cited above indicate that a wide range of actions constitute money
laundering. Like other offences, a person can commit money laundering as a principal
offender, or as an accomplice to acts that constitute the offence of money laundering. The
AML Act provides further that,for a person to be guilty of the offence of money laundering,
he/she should, at the time of committing the offence, have knowledge or ought to have
known that the money or property involved was derived from or associated with the
commission of a money laundering predicate offence [6]. This imposes persons, including
lawyers, notaries and independent legal professionals, to make enquiries and be diligent in
determining the legitimacyof transactions conducted by on behalf of their clients and funds
or assets generated from those transactions. The money or property involved shouldbe the
proceeds of crime, that is to say, were generated as a result of criminal activities. The
Proceeds of Crimes Act 1991 [7]defines “proceeds of crime”as a property derived or
realized, directly or indirectly,from the commission of a crime [7]. And, a “property”means
real or personal property of any typewhether tangible or intangible and includes an interest
in such property [9].
Therefore, money launderingis the processing of “dirty”or ill-gotten through a series of
transactions, with the objective that the funds should be “cleaned”and look like proceeds
from legal activities. Money laundering is driven by criminal activities and aims at
disguising the true origin,ownership or use of funds generated from those criminal offences.
It is used to evade the detection and capture of the criminalsand enables them to enjoy illicit
benefits derived from the proceedsof crime (Mugarura, 2011). While money laundering is an
essentially financial crime and involves finance-related transactions, both monetary
properties and non-financial assets are processed or involved during the money laundering
circle. Without money laundering,it would be impossible for criminals to enjoy and benefit
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