Challenges Facing Commercial Banks in Combating Money Laundering in Tanzania: A Case of National Bank of Commerce (NBC)

Magessa, Boniface M (2013) Challenges Facing Commercial Banks in Combating Money Laundering in Tanzania: A Case of National Bank of Commerce (NBC). Masters thesis, The Open University of Tanzania.

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Abstract

This study assessed the challenges facing commercial banks in combating money laundering in Tanzania. However, lack of competent workers in terms of ML knowledge, and the knowledge on associated issues around ML such as globalization, advancement in ICT, liberalization of the economy, political interference, corruption, and lack of staff commitments, lack of government commitment, FIU weakness and technology are seen to be the most critical ones. The major cause of this ugly practice is the increase of economic crimes due to uncontrolled economy which affects money supply, causes inflation and affects other macroeconomic indices adversely. This research therefore reviews the challenges facing commercial banks in combating ML in Tanzania and the ways to curb/mitigate them. To explore these themes, primary and secondary sources of data were used. The questionnaires raised were distributed upon a sample size drawn from the population of some selected banks ie. NBC Ltd. Findings showed that money laundering is in increasing in commercial banks in Tanzania despite the efforts done by the Government to curb it. It is concluded that ML is a critical problem to the banking operations, and that, politicians play a key role in making the efforts towards effectively fighting of these practices unachievable dream. Political will are strong needed if the fights against ML is to be achieved. This is because ML practices have a lot of negative consequences to the economy. It is clear therefore that ML practices are dangerous and well-coordinated efforts towards fighting these practices are needed. It should not only be left to banks or law enforcing organs only but the community in general should participate in this fight. Basing on research findings, more current and updated education on ML issues are needed to banking employees i.e. Advancement in science and technology, and liberalization of the economy should be given special emphasis. There should be an advanced system of identifying banking customers (KYC). Also; there is a need to promote banking economy instead of the current cash economy. Awareness to politicians not to get involved in ML practices is also needed.

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