Monday, 16 January 2012 21:43, The Citizen Reporter

http://thecitizen.co.tz/business/-/18931-cash-based-economy-fuels-illegal-money

Dar es Salaam. Uncontrolled cash transactions which are legal in many developing countries including Tanzania are said to be facilitating money laundering as it is difficult to detect suspicious business deals.

This was said by Assistant Commissioner of the Financial Intelligence Unit (FIU) Gilbert Nyombi during an awareness seminar on anti-money laundering and combating of the financing of terrorism for the media in Dar es Salaam on Wednesday.

According to him, Tanzania and many other developing countries were facing money laundering as a result of its cash-based economy even in major transactions.“Unlike other countries which have limits to cash transactions, Tanzania is a too much cash-based economy. One can even buy a car in cash and there is nothing wrong,” said Mr Nyombi during his presentation.

Low access to financial institutions and banking services in the country are explained as reasons for cash transactions to dominate the economy.

Despite the large number of financial institutions in the country, majority of Tanzanians do not have access to them as they are concentrated in urban areas. A recent Finscope survey said less than 10 per cent of Tanzanians access banking services although the country has over 40 commercial banks.

“There are people who live in rural areas where there is no access to banking services and they normally do cash transactions. If you introduce a limit to cash transactions, how will they survive?” lamented Mr Samson Kassala, deputy commissioner of Police in the intelligence directorate.

He added that the best way was to expand banking services to rural areas so that whenever the limit to cash transactions comes they won’t be left out of the market.

Money laundering refers to the process of concealing the source of illegally obtained money. Money launderers try to clean their money through gumbling, building real estates and investing in industries.The government is in the process to amend the Anti-Money Laundering Act of 2007 to fit the current situation.