In this industry briefing, we provide an update on our brief note of June 2018 that focused on the amendments to the Foreign Exchange (Bureau de Change) Regulations 2017 (the Bureau de Change Amendment Regulations).
Briefly, in 2017, the Bureau de Change Amendment Regulations introduced new rules relating to ownership and operation of bureaux, including increasing the minimum capital requirements for the different classes of bureaux, increasing the security deposit amount, introducing more compliance requirements and requiring bureaux to make effective use of internal protocols.
Only two years after the Bureau de Change Amendment Regulations were enacted, we now have an indication that there are new rules to be introduced to the banking and finance sector for bureaux operating in Tanzania. In the last 6 months, the bureaux in Tanzania have seen a complete downturn which began with the closure of bureaux in Arusha in November 2018 and then the closure of many bureaux in Dar es Salaam in March 2019. While many bureaux are now closed, commercial banks operating in Tanzania continue to engage in foreign exchange transactions with a renewed interest.
The reasons for the closure of the bureaux were cited as arising from an audit into the operations of bureaux, which revealed that these shops have been used as agents for money laundering and capital flight.
The new rules that will be introduced in due course are aimed at creating a more conducive business environment, which will not negatively impact the financial sector. It is anticipated that these new rules will, among other things, revamp the requirements for bureaux to be granted a bureau de change licence. It will also change the conditions needed to maintain such a licence, effectively ensuring that persons operating in this sector have much more stringent requirements to comply with before being permitted to operate a bureau de change in Tanzania.