The Bank of Tanzania has distanced itself from the Leo Beneath London (LBL) online fraud scandal, where 17 individuals were arrested for running a Ponzi scheme disguised as a movie promotion agency. The BoT is responding to growing concerns over digital fraud by proposing new regulations for microfinance operations, set to take effect by June 30. The new guidelines aim to enhance oversight and consumer protection in Tanzania’s lending landscape.
The Bank of Tanzania (BoT) has distanced itself from a significant online fraud scandal involving the company Leo Beneath London (LBL), which purportedly operated a Ponzi scheme masked as a movie promotional agency. Recent police operations led to the arrest of 17 individuals linked to LBL across several regions, including Dar es Salaam and Morogoro. The company reportedly solicited deposits from individuals who aimed to earn money by watching short films and recruiting new members.
LBL claimed partnerships with major film studios, offering points for each movie view with the promise of lucrative returns exceeding the initial fees, which varied from Tsh50,000 ($20) to Tsh540,000 ($207). Authorities highlighted that the model resembled a typical pyramid scheme, potentially involving hundreds of victims, though precise figures on losses are still being compiled.
This case has intensified scrutiny on Tanzania’s central bank regarding its regulation of microfinance and online lending practices, which have reportedly increased in fraudulent activities over recent years. In response, the BoT issued a public notice explicitly stating that it had never authorized or licensed the operations of LBL, addressing misconceptions surrounding the company’s legitimacy.
BoT Governor Emmanuel Tutuba confirmed that legal actions are underway against LBL officials for engaging in unauthorized deposit collection and financial activities. The central bank has also proposed new regulations targeting microfinance services in both digital and non-deposit sectors, aiming for implementation by June 30, with public feedback invited before finalizing these measures.
Key changes will mandate that primary database servers remain within Tanzania and prohibit lenders from operating on multiple platforms simultaneously. Furthermore, the regulations define new capital requirements for non-deposit microfinance service companies based on foreign versus local ownership.
In conclusion, the Bank of Tanzania is actively responding to the increasing threats posed by fraudulent online lending schemes, as epitomized by the Leo Beneath London case. Through enhanced regulatory frameworks and public disclosures, BoT aims to protect consumers and ensure stable financial practices in the microfinance sector. The bank’s commitment to addressing misconduct is crucial for restoring public confidence in financial institutions. Nonetheless, the effectiveness of these new regulations will ultimately hinge on rigorous enforcement and ongoing vigilance against emerging fraud tactics.
Original Source: www.zawya.com
