So far, over 50 bureaux de change in the commercial capital have not opened for business for weeks after the Bank of Tanzania (BoT) conducted an impromptu inspection into their undertakings.
Preliminary findings by the regulator established that some of these businesses were flouting the law, regulations and procedures associated with the money changing business.
BoT Governor, Prof Florens Luoga said here yesterday that the ongoing probe has revealed a lot of rot, noting that a final report on the matter will be issued once the exercise is completed.
"The government inspection has revealed a lot, for instance in Dar es Salaam only five out of the 87 bureaux de change were operating within the law, the rest were associated with money laundering," he specified.
The governor made the statement at a press conference convened by the Minister for Finance and Planning, Dr Philip Mipango to brief reporters on the ongoing crackdown on bureaux de change in Arusha and Dar es Salaam.
The minister earlier said the inspection has revealed that there were a lot of transactions from the formal money system to unlawful system, thus elements of money laundering.
This, he said weakened the local currency and among other actions started to threaten national security.
"Some of the bureaux de change were found to spend a lot of Tanzanian shillings buying foreign currencies but few foreign currencies were found without any report on how the foreign money left," he said.
The inspection was in line with national laws, contrary to complaints from some people that the exercise was contrary to the law and was a violation of the traders' rights, he stated.
The minister argued that BoT is following on the matter to ascertain the facts behind various transactions.
The relevant legal procedures were followed in confiscating equipment like computers, mobile phones or special information storage machines to help with investigations.
"The government is very keen on the investigations and I would like to tell the public that no money or equipment obtained at the bureaux de change has been nationalized," noted Dr Mipango, insisting that the aim is to properly regulate the business.
The government has prepared new policies specifying on license application and operation of bureaux de change, he said, noting that the guidelines will help to create a good business environment and eliminate risks to the entire financial sector.
Speaking on the effects of the inspections, he said the shilling has slightly gained strength, rising from 2,450/- against the dollar at the onset of the investigations to an average of 2,300/- currently.
At the same time commercial banks have also increased their daily collection of foreign currencies reaching an average of $ 15 million per day.
"It is my hope that through the government's control of the business, commercial banks and other financial institutions in the country will trade more foreign currencies and increase their stock of the same," the minister underlined.
He dispelled speculations that the government carried the crackdown on bureaux de change because it lacked foreign currencies in its store. There was no rationing in effort to control the use of foreign money in the country, he added.