At least half of the forex bureaus in Tanzania are expected to close down within the next two weeks, the Bank of Tanzania (BoT) has said.
The forex bureaus are closing down as a result of the new regulations imposed by the central bank since mid-last year. The regulations among other things raised capital requirements, imposed mandatory auditing and a relicensing requirement.
“Our expectation is that when the exercise is completed, at least 50 per cent of the bureaus de changes would have stopped operations,” Bank of Tanzania’s (BoT) Director of Banking Supervision, Mr Eliamringi Mandari told reporters on Tuesday.
He placed the timeframe for completion of the shutdown or relicensing process to be two weeks. This means that, in just a fortnight, half of the bureaus operating in Tanzania will be out of business.
As of January 31st this year, 110 of the 297 registered forex bureaus in the country had closed down.
It is not all doom and gloom as about 71 bureaus have been relicensed and allowed to resume operations.
Another 65 await the review process that will determine whether they are to shut down or continue operations.
Authorities explain the forex bureaus auditing process as a move meant to protect the local currency check illicit financial flows including money laundering and other financial crimes.
The regulations have also been imposed due to what authorities describe as gross noncompliance to regulations and under reporting of capital and revenue earnings which robs the government due tax.
The forex bureaus woe started as of June last year. The Central Bank suspended issuing of licenses for new forex bureaus which means no new forex bureau has been opened in Tanzania since June last year.
Then the BoT ordered all existing forex bureaus to re-apply for lisences but placed new minimum capital requirements as well.
Under the new regulations, the bureaus are required to hold a non-interest deposit of $100,000 at the BoT to serve as security for money transfer transactions.
Then they are to have a minimum of 300m/- in capital of which 200m/- should be in cash. This value has been raised from the former 100m/- for those dealing in spot foreign exchange transactions.
As for those handling additionally money transfers the minimum capital requirement is now 1bn/- up from 250m/-
Further still, all forex bureaus are now required to have CCTV cameras at the counter, to have a customer lounge and proper offices. The requirement is meant to improve security and monitoring of activities at the bureaus.
The watchdog says bureau de change operators are conducting a lot of illegal transactions and are allegedly involved in money laundering and drug trafficking issues.
The Central Bank reassured the public that they will not be any shortage of foreign currencies feared. The regulator maintained that even if there is a small number of forex bureaus in the country, there are sufficient numbers of commercial banks to meet the demand that will arise offering similar rates as do the forex bureaus.