FATF Status

Tanzania is on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement  -  23 February 2024

Since October 2022, when Tanzania made a high-level political commitment to work with the FATF and ESAAMLG to strengthen the effectiveness of its AML/CFT regime, Tanzania has taken steps towards improving its AML/CFT regime, including by building the capacity of its LEAs to investigate and prosecute different types of ML cases through recruitment and training of new and existing staff, as well as addressing TFS technical deficiencies. Tanzania should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) improving risk-based supervision of FIs and DNFBPs, including by conducting inspections on a risk-sensitive basis and applying effective, proportionate, and dissuasive sanctions for non-compliance; (2) demonstrating authorities’ capability to effectively conduct a range of investigations and prosecutions of ML in line with the country’s risk profile; (3) demonstrating that LEAs are taking measures to identify, trace, seize, and confiscate proceeds and instrumentalities of crime; (4) conducting a comprehensive TF Risk Assessment and beginning to implement a comprehensive national CFT strategy as well as demonstrating capability to conduct TF investigations and pursue prosecutions in line with the country’s risk profile; (5) increasing awareness of the private sector and competent authorities on TF and PF-related TFS; and (6) carrying out the TF risk assessment for NPOs in line with the FATF Standards and using it as a basis to develop an outreach plan.

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Tanzania was undertaken in 2021. According to that Evaluation, Tanzania was deemed Compliant for 3 and Largely Compliant for 11 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness  & Technical Compliance ratings.

US Department of State Money Laundering assessment (INCSR)

Tanzania is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.

Overview

Tanzania has established institutional frameworks and introduced several laws to address money laundering and terrorism financing.  The financial intelligence unit (FIU) is recognized in Zanzibar as the national center for receiving suspicious transaction reports (STRs), analysis, and dissemination of reports to law enforcement agencies. 

Tanzania is vulnerable to money laundering and financial crimes due to its underdeveloped financial sector and limited capacity to address such criminal activity.  Criminal activities with a money laundering nexus include transnational organized crime, tax evasion, corruption, smuggling, trade invoice manipulation, illicit trade in drugs and counterfeit goods, wildlife trafficking, and terrorism.  There continue to be high-profile arrests for money laundering; however, few cases result in convictions.  In recent years, under the previous administration, the Government of Tanzania leveraged money laundering laws to jail journalists, activists, and others without bail.  The use of these laws for political purposes dilutes their efficacy in combating real crime.  The current administration is encouraged to commit to enforcement of money laundering laws in an even and transparent manner, and to build capacities among key stakeholders in the financial, law enforcement, customs and tax collection, and judicial sectors.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                          40

World Governance Indicator – Control of Corruption             43

Corruption is pervasive throughout Tanzanian society and is a serious problem across all sectors of the economy. The most affected sectors are government procurement, land administration, taxation and customs. Petty corruption in dealings with traffic, customs and immigration officers deters investment. Corruption is criminalized under the Prevention and Combating of Corruption Act (PCCA), which covers attempted corruption, extortion, passive and active bribery, money laundering and bribery of a foreign official. A range of legislations cover other corruption offences, but anti-corruption laws are applied inconsistently and are poorly enforced. Gift-giving and the use of facilitation payments for the purpose of inducing corrupt behavior are illegal under the PCCA. However, companies should note these practices can be commonly encountered when doing business in Tanzania. For further information - GAN Integrity Business Anti-Corruption Portal

The United Republic of Tanzania achieved lower-middle income country status in July 2020, following two decades of sustained economic growth. The country’s solid macroeconomic foundation, sound fiscal policies, rich natural endowments, and strategic geographic position have fostered a diverse economy resilient to external shocks. This proved critical amidst persistent global crises, including the COVID-19 pandemic, food security concerns, and Russia’s war in Ukraine. While these conditions resulted in an economic downturn, Tanzania avoided a more severe recession and economic growth is recovering on an upward trajectory, reaching 4.6 percent in 2022 and projected to expand to 5.2 percent for 2023.

The Government of the United Republic of Tanzania welcomes foreign direct investment, though investors cite regulatory bureaucracy; land acquisition and ownership; logistics and infrastructure inefficiencies; and investment facilitation coordination as ongoing challenges. President Samia Suluhu Hassan continues to prioritize sustainable economic growth at the forefront of the administration’s policies, strategies, and goals. Consistent with a positive rhetorical shift towards the private sector, promised reforms to improve the investment climate continue to take shape. Building on favorable changes made early in her tenure – including improvements to the work permits process and timeline, disbandment of the special ‘Tax Task Force’, and strengthened regional trade cooperation – President Hassan’s administration has sought to engage stakeholders, including local private sector organizations and development partners, to improve the business climate and regain investor confidence. Notably, a new Tanzania Investment Act was passed and enacted in 2022, introducing reforms broadly intended to create a more favorable investment environment for domestic and foreign investors. Key changes include elevating Tanzania Investment Center’s role in promoting, facilitating, and coordinating investment; establishing an integrated electronic system for investment promotion and facilitation; removing the time limitation for an investor’s appeal of a rejected application; clarifying and codifying timeframes for certificates of incentives; reducing the minimum investment capital threshold for domestic investors; protecting existing certificates of incentives; and granting access to international arbitration for foreign investors for settling disputes with TIC or the Tanzanian government through arbitration.

However, while several laws have been reviewed, business climate legislative reforms have not yet been sweeping. There remain significant legislative obstacles to foreign investment such as the Natural Resources and Wealth Act, Permanent Sovereignty Act, Public Private Partnership Act, and the Mining Laws and Regulations. Despite pledges by President Hassan and senior government officials, these have yet to be resolved; rather, the administration has selectively eased the application of these laws. The primary business and investment challenges lie in tax administration; opening and closing businesses; inconsistent institutions compounded by corruption and requests for “facilitation payments” at many levels of government; late payment issues; and cross-border trade obstacles. Corruption, especially in government procurement, taxation, and customs clearance remains a concern for foreign investors, though the government has prioritized efforts to combat the practice.

Sectors presenting opportunities for U.S. investment include agriculture and agro-processing; tourism; information and communications technology; infrastructure and transportation; energy; mining and extractive industries; and manufacturing. Other opportunities exist in workforce development, microfinance solutions, technology, and consumer products and services.

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Country Links

Tanzania Financial Intelligence Unit (FIU)​

Bank of Tanzania