Top Kenyan banks are among those that have been fined in Tanzania after they were found guilty of money laundering by the country’s banking regulator.
The Tanzanian subsidiaries of I&M Bank and Equity Bank, both headquartered in Kenya, topped the list of the five banks fined.
Tanzania’s central bank said yesterday it had fined five commercial banks over $800,000 (Sh80 million) for breaching anti-money laundering rules, the latest in a series of moves aimed at tightening regulation in the financial services sector.
The Bank of Tanzania (BoT) said in a statement the fines were imposed “for failure to conduct proper customer due diligence and file suspicious transaction reports to the (state-run) Financial Intelligence Unit (FIU).”
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I&M Bank was slapped with the biggest fine at 655 million Tanzanian shillings (Ksh29.7 million), followed by Equity Bank Tsh580 million (Ksh26 million), UBL Bank Tsh325 million (Sh14.7 million), Habib African Bank Tsh175 million (Ksh8 million) and African Banking Corporation Tsh145 million (Ksh6.6 million). The banks were not immediately available for comment.
The regulator gave three months to the sanctioned banks to implement various anti-money laundering measures, which include taking disciplinary action against all staff members “who were involved in opening implicated deposit accounts contrary to KYC (know your customer) requirements”.
Tanzania has tightened regulatory oversight over commercial banks and other financial institutions over the past few years.
The central bank last month gave all banks and financial institutions in Tanzania 90 days to establish primary data centres in the East African nation, saying it will impose hefty fines on lenders that fail to comply.
The country’s financial services sector, which is dominated by lenders like CRDB Bank and NMB Bank, has been hit by a spike in bad loans, which have stifled the growth of credit to the private sector.
In December, the International Monetary Fund said nearly half of Tanzania’s 45 banks were vulnerable to adverse shocks and risked insolvency in the event of a global financial crisis.
Tanzania’s central bank has revoked the licences of at least nine banks since 2017, saying the move was aimed at safeguarding the stability of the sector.
The closure of the banks came after President John Magufuli (pictured) ordered the central bank to take action against failing financial institutions.