Abstract This research report is to determine the readiness of financial institutions in tackling money laundering activities in its system. The importance of this research is to assist the bank and other financial institutions put in place strategies to combat money laundering. The study will also assist fiscal policy planners to identify the problem and design measures on how to deal with the issues particularly Bank of Tanzania(BOT). Literature obtained from the study will be useful for academic purposes. The researcher who happens to work in National Bank of Commerce(NBC) will benefit immensely from the study and will be able to advice stakeholders and the entire NBC Management on how to deal with to detect and deal with money laundering hence making him not only efficient but also effective in his assignment as bank officer. This research thesis was guided by the following objectives namely, to determine the readiness of the financial institution to tackle money laundering activities in its system, to establish measures employed by National Bank of Commerce in respect to money laundering and to identify the machinery and manpower in combating money laundering. The research questions used by the researcher were: what are the effects of money laundering at NBC Ltd and what are the measures taken by NBC Ltd in respect to money laundering. Furthermore, data obtained was summarized and analyzed using qualitative procedures and presented into figures, tables and percentage to simply numbers. The findings of the study clearly demonstrate that the problem facing NBC Ltd when fighting money laundering is the difficulty of identifying the crime. The launderers use smurfing technique where large amount of cash are divided into smaller amount to launder them more effectively. vi The study established further that banks and other financial institutions through banker’s duty of secrecy hinders to some extent the disclosure of suspicious transactions of their customers to the authorities. Criminals have taken advantage of the banker’s duty of secrecy to legalize their dirty money from unlawful sources such drug trafficking and other illegal activities in the banking hall. Nevertheless, the study noted the need for banks and financial institutions in Tanzania, together with the BOT as their supervisors, to implement the KYC standards fully and other FATF recommendations so as avoid usage of banking systems in money laundering. The implementation and assessment of such standards are up to the supervisors to cooperate with banks and financial institutions in a very practical way as well as the ability of banks and financial institutions to control such risks