The Bank of Tanzania has distanced itself from the fraud involving Leo Beneath London, a Ponzi scheme disguised as a film promotion agency. Seventeen people have been arrested in connection with the case. The BoT has signaled its intent to strengthen regulations in the microfinance sector to combat digital fraud effectively.
The Bank of Tanzania (BoT) has recently distanced itself from a fraudulent online scam associated with Leo Beneath London (LBL), which has been exposed as a Ponzi scheme masquerading as a movie promotion agency. In the past week, authorities arrested 17 individuals linked to LBL in various cities for allegedly soliciting deposits for an online program that promised returns through viewing movie clips. The company claimed partnerships with major studios and incentivized users to recruit others, indicative of a pyramid scheme. Hundreds are reportedly affected, with ongoing investigations aiming to quantify the total financial losses involved.
Amid increasing scrutiny, the BoT has emphasized its commitment to combating digital fraud in Tanzania’s microfinance sector. On February 24, the central bank issued a statement clarifying its non-involvement with LBL, asserting that no approvals or licenses were granted to the company. The public notice, signed by Governor Emmanuel Tutuba, further declared that legal action would be pursued against LBL officials for illegal deposit-taking and financial operations without necessary permissions from the bank.
In response to these incidents, the BoT has also drafted new regulations for microfinance operations in both digital and non-deposit categories. These proposed changes aim to enhance oversight and ensure compliance by establishing licensing eligibility, operational restrictions, and penalties for violations. Notably, primary database servers for digital lending must be housed within Tanzania, and lenders will be restricted from using multiple platforms simultaneously.
Furthermore, the regulations mandate that non-citizens wishing to operate in the non-deposit microfinance sector must register a local company and may employ a limited number of non-citizens with prior approval from the central bank. The proposal also includes minimum capital requirements based on local versus foreign ownership to further regulate the market. Effective feedback from the public on these new rules has been requested by the BoT until June 30.
In light of these developments, the Bank of Tanzania is reinforcing its efforts to regulate microfinance lending and safeguard its citizens from fraudulent schemes while enhancing the overall integrity of the financial system.
In summary, the Bank of Tanzania’s decisive actions against online lending scams highlight its dedication to protecting consumers in the digital lending landscape. With new regulations forthcoming, there is hope for increased oversight and reduced fraudulent activities within the microfinance sector. The emphasis on local compliance and operational integrity could bolster public confidence in Tanzania’s financial institutions going forward.
Original Source: www.zawya.com
