Regulating the Unregulated: Assessing the Legal and Regulatory Framework for Combating Digital Asset-Facilitated Money Laundering in Tanzania

Abstract

Digital assets such as cryptocurrencies and stablecoins create new channels for laundering criminal proceeds, and their use in East Africa is growing. This article asks how adequate Tanzania’s legal and regulatory framework is in preventing, detecting and sanctioning money laundering involving digital assets. It uses doctrinal analysis of Tanzanian legislation and case law, measured against Recommendations 15 and 16 of the Financial Action Task Force (FATF). Its comparative element is confined to Kenya’s Virtual Asset Service Providers Act, 2025, as the regional comparator, with the European Union, the United States and Nigeria used only for specific design lessons. Amendments made to the Anti-Money Laundering Act in 2022 defined “virtual asset” and “virtual asset service provider”, and the Act’s definition of “financial institution” refers to virtual currency exchangers and wallet providers. The Act nevertheless establishes no licensing or registration regime and designates no supervisor for this sector. Its definition of a virtual asset depends on government recognition that has not been given, and the Travel Rule has not been implemented. In 2024, the High Court held in Yellow Card Tanzania Limited v Nyamwero Michael Nyamwero that digital asset transactions are not illegal merely because they are unregulated, but that first-instance decision does not supply the missing regulatory framework. The article recommends four measures: express designation of virtual asset service providers as reporting persons under a licensing regime, the appointment of a lead supervisor, procedural reforms for seizing digital assets and admitting blockchain evidence with privacy safeguards, and regional coordination through the East African Community.