Reports of a Ponzi scheme linked to Leo Beneath London in Tanzania have prompted the Bank of Tanzania to enact stricter regulations against fraudulent practices in the microfinance sector. Seventeen individuals have been arrested, and legal actions are underway against the implicated company. New regulations are being proposed to enhance oversight and protect consumers in online lending.
The Bank of Tanzania (BoT) has distanced itself from allegations involving online fraud related to Leo Beneath London (LBL). Recent police operations have led to the arrest of 17 individuals across the nation, suspected of running a Ponzi scheme disguised as a movie promotion agency. The company, also known as Leo Beneath Tanzania (LBT), allegedly solicited deposits from customers to participate in an online program to view movie trailers for financial rewards.
The scheme promised participants significant earnings based on point accumulation for viewing short films, with recruitment incentives offering additional income opportunities. However, the authorities identified this operation as a pyramid scheme, attracting hundreds of unsuspecting clients. The total number of victims and the amount of money defrauded are currently under investigation by law enforcement.
Amid rising concerns about digital fraud, the central bank faces mounting pressure to improve oversight within the microfinance sector. In a rare public response, BoT clarified that it had not authorized LBL’s operations, stating, “The Bank of Tanzania would like to inform the public that it has not engaged in any discussions or issued any directives to license or allow operations of a company named Leo Beneath London (LBL)…”
Legal measures are being initiated against LBL’s officials for conducting illegal financial activities without the necessary licenses. In response to this situation, BoT has proposed new regulations to better govern microfinance services, recording a deadline for public comments on these regulations by June 30.
The forthcoming regulations will replace the 2019 framework, introducing clearer eligibility criteria and operational stipulations aimed at eliminating unfair lending practices. Emphasis will be placed on local data storage and the prohibition of simultaneous operations on multiple platforms, requiring lenders to use Kiswahili predominantly in communications.
Additionally, there are new minimum capital requirements for foreign and local entities wishing to provide non-deposit microfinance services, with enhanced scrutiny over lending policies and compliance with consumer protection laws. Meanwhile, non-Tanzanian individuals wanting to operate in this sector must establish a local company and face stringent employment limitations without prior consent from the central bank.
In summary, Tanzania’s central bank is taking decisive action against fraudulent online lending schemes while tightening regulations in the microfinance sector. The crackdown on Leo Beneath London highlights the need for stronger regulatory frameworks to protect consumers from misleading financial operations. With new regulations on the horizon, BoT aims to enhance oversight and ensure compliance among financial service providers.
Original Source: www.zawya.com
