FATF AML Deficiency List
US Dept of State Money Laundering assessment
Non - Compliance with FATF MER Recommendations
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
Weakness in Government Legislation to combat Money Laundering
Tanzania is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies
Latest FATF Statement - 27 June 2014
The FATF welcomes Tanzania’s significant progress in improving its AML/CFT regime and notes that Tanzania has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in October 2010. Tanzania is therefore no longer subject to FATF’s monitoring process under its on-going global AML/CFT compliance process. Tanzania will work with ESAAMLG as it continues to address the full range of AML/CFT issues identified in its mutual evaluation report.
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.
Tanzania is vulnerable to money laundering and financial crimes due to its underdeveloped financial sector and limited capacity to address such criminal activity. Money laundering laws are used as political tools, which dilutes their efficacy in combating crime. Criminal activities with nexuses to money laundering include transnational organized crime, tax evasion, corruption, smuggling, trade invoice manipulation, illicit trade in drugs and counterfeit goods, and wildlife trafficking. There are Tanzanian links to regional terrorist financing.
In 2019, Tanzania updated its AML regulations to include stricter KYC requirements and requirements for reporting entities to carry out money laundering and terrorist financing risk assessments and enhanced due diligence. In September 2019, Tanzania’s central bank, the Bank of Tanzania, fined five commercial banks over $800,000 for noncompliance with these regulations. Despite high-profile arrests for money laundering, there are very few convictions.
On September 22, 2019, President Magufuli called for “amnesty” for those accused of money laundering and other economic crimes, in exchange for a guilty plea and fines. Tanzania should commit to enforcing money laundering-related laws in an even and transparent manner and continue to build the human and technical capacities of the judiciary, financial supervisors, law enforcement, customs, and tax authorities.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 38
World Governance Indicator – Control of Corruption 41
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
Tanzania is one of the world's poorest economies in terms of per capita income, but has achieved high growth rates based on its vast natural resource wealth and tourism. GDP growth in 2009-15 was an impressive 6-7% per year. Dar es Salaam used fiscal stimulus measures and easier monetary policies to lessen the impact of the global recession. Tanzania has largely completed its transition to a market economy, though the government retains a presence in sectors such as telecommunications, banking, energy, and mining.
The economy depends on agriculture, which accounts for more than one-quarter of GDP, provides 85% of exports, and employs about 80% of the work force; agriculture accounts for 7% of government expenditures. All land in Tanzania is owned by the government, which can lease land for up to 99 years. Proposed reforms to allow for land ownership, particularly foreign land ownership, remain unpopular.
The financial sector in Tanzania has expanded in recent years and foreign-owned banks account for about 48% of the banking industry's total assets. Competition among foreign commercial banks has resulted in significant improvements in the efficiency and quality of financial services, though interest rates are still relatively high, reflecting high fraud risk. Recent banking reforms have helped increase private-sector growth and investment.
The World Bank, the IMF, and bilateral donors have provided funds to rehabilitate Tanzania's aging infrastructure, including rail and port, that provide important trade links for inland countries. In 2013, Tanzania completed the world's largest Millennium Challenge Compact grant, worth $698 million, and, in December 2014, the Millennium Challenge Corporation selected Tanzania for a second Compact.
In late 2014, a highly publicized scandal in the energy sector involving senior Tanzanian officials resulted in international donors freezing nearly $500 million in direct budget support to the government. The Tanzanian shilling weakened in 2015 because of lower gold prices, election-related political risk, and outflows from emerging market currencies generally.
Agriculture - products:
coffee, sisal, tea, cotton, pyrethrum (insecticide made from chrysanthemums), cashew nuts, tobacco, cloves, corn, wheat, cassava (manioc, tapioca), bananas, fruits, vegetables; cattle, sheep, goats
agricultural processing (sugar, beer, cigarettes, sisal twine); mining (diamonds, gold, and iron), salt, soda ash; cement, oil refining, shoes, apparel, wood products, fertilizer
Exports - commodities:
gold, coffee, cashew nuts, manufactures, cotton
Exports - partners:
India 21.4%, China 8.1%, Japan 5.1%, Kenya 4.6%, Belgium 4.3% (2015)
Imports - commodities:
consumer goods, machinery and transportation equipment, industrial raw materials, crude oil
Imports - partners:
China 34.6%, India 13.5%, South Africa 4.7%, UAE 4.4%, Kenya 4.1% (2015)
Investment Climate - US State Department
Tanzania has sustained an average rate of 6-7% economic growth since the late 1990s due to a relatively stable political environment, reasonable macroeconomic policies, structural reforms, and a resiliency from external shocks and debt relief.
The IMF projects the economy will continue to grow around 7% in the medium-term as both public and private investment accelerates and lower inflation boosts consumption. Inflation has continued to decline due to crop production, lower food prices, and lower oil prices. Despite these efforts, widespread poverty persists with 43.5% of Tanzania’s population living below the extreme poverty line of $1.25 per day (in 2005 PPP exchange rate). Tanzania’s 6-7% average annual GDP growth has been hardly perceptible among Tanzania’s predominantly rural (70%) population. Inclusive, broad-based growth is stymied by slow growth in labor intensive sectors (agriculture employs 77% of Tanzania but has grown at just 4% per year over the past decade) and a high and steady population growth rate.
The Tanzanian government continues to pursue economic policies to reduce poverty, encourage good governance, and protect workers’ rights. These include some steps to encourage private sector-led growth. In February 2013, former President Jakaya Kikwete launched the Big Results Now (BRN) initiative to focus attention on six priority areas, including energy and agriculture. After a meeting of the National Business Council in November 2013, the GOT added a seventh area on a “business enabling environment” to the BRN list. Meetings were held in March 2014 to determine key issues to address to improve the investment climate. The economic direction of Tanzania following the November 2015 inauguration of new President John Magufuli, however, is less clear and more time is needed to determine what steps the new government will take to encourage private sector growth.
Best prospects in Tanzania include the energy and mining sector, given the country’s deposits of coal, natural gas, and uranium. Tanzania's services sector is also growing strongly, driven by telecommunications, banking, and trade. Untapped potential in the tourism sector can only be utilized with increased infrastructure investment. Corruption, especially in government procurement, privatization, taxation, and customs clearance, remains a major concern for donors and foreign investors. U.S. businessmen have identified petty corruption, particularly among customs and immigration agents and traffic police, as an obstacle to investment.
Tanzania held its fifth multi-party general elections on October 25, 2015. The ruling Chama Cha Mapinduzi (CCM) party faced its most serious competition in the multi-party era. In mainland Tanzania, the CCM party candidate John Pombe Magufuli won the presidential election with 58% of the vote. In Zanzibar, the October election was controversially annulled, and a re-run election was held on March 20, 2016. CCM swept the re-run amidst an opposition boycott, in a poll that was widely criticized for failing to adhere to principles of a free and inclusive election. A special session of Parliament rewrote the constitution in 2015 and presented a draft for a public referendum, scheduled for April 30, 2015 although the process was subsequently postponed indefinitely.
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