The FIU was established under section 4 of the Anti Money Laundering Act, Cap. 423 of 2006 (AMLA) to combat money laundering and the financing of terrorism. It is an Extra-Ministerial Department under the Ministry of Finance.  The FIU came into operation in September, 2007. The head of the FIU is a Commissioner who is appointed by the President of the United Republic of Tanzania.

AMLA also established the National Multi Disciplinary Committee on Anti Money Laundering comprising members from both, Tanzania mainland and Zanzibar. The Committee plays an advisory role on AML/CFT issues in the country.

The primary function of the FIU is to combat money laundering and the financing of terrorism in Tanzania. It is therefore responsible for receiving suspicious transaction reports from reporting persons, in relation to suspected money laundering and terrorist financing activities, analysing and disseminating intelligence to appropriate law enforcement agencies for investigation and further action.

The FIU is an integral part of Tanzania's efforts in the fight against the global crimes of money laundering and terrorist financing. Detecting, preventing and combating money laundering and related vices is one important way of maintaining the integrity of the economy and making Tanzania a good investment destination.