The Government of Tanzania has passed new regulations on Anti Money Laundering to enhance compliance against Money Laundering in Tanzania. The changes came in a set of two regulations comprising of the Anti-Money Laundering (Amendment) Regulations, 2019 (GN No. 419 of 2019) and the Anti-Money Laundering (Electronic Funds Transfer and Cash Transactions Reporting) Regulations, 2019 (GN No. 420 of 2019). These regulations, have imposed additional requirements to threshold required to reporting the transaction for Anti-Money Laundering purposes but, more importantly, imposed an obligations to reporting persons (including Banks and Financial Institutions; Cash dealer; Accountants, Real Estate Agents, Dealer in precious stones work of art or metals; a Regulator; Customs officer; Attorneys, Notaries and other independent legal professionals) to obtain sufficient information about their customers and transaction contemplated. In this update, we shall highlight the changes imposed by the two regulations and their implication to the business community at large.
THE ANTI-MONEY LAUNDERING (AMENDMENT) REGULATIONS, 2019
The Anti-Money Laundering (Amendment) Regulations, 2019 (GN No. 419 of 2019) were issued by the Minister for Finance and came into force on 24th May, 2019. Among others, the amendments have added a new requirement for a Reporting Person, which includes; Banks and Financial institutions; Cash dealer; Accountant, Real Estate Agent, dealer in precious stones work of art or metals; a regulator; Customs officer; Attorneys, Notaries and other independent legal professionals, to obtain sufficient information from the person they deal with in Tanzania. The regulation has enlisted mandatory information to be required and produced including; names, nationality, occupation, residential address, date and place of birth, national identity card (in case of citizens) residence permit (in case of a resident), introductory letter from employer (for employee), Tax identification Number, signature, among others (Regulation 3).
Further, regulation 17A has been added to impose a requirement for a Reporting Person to carry out Money Laundering and Terrorist financing risk assessment as part of customer due diligence. In undertaking the said risk assessment, Reporting Persons are required to take into account the National Money Laundering and Terrorist Financing Risk Assessment Report, the Sector Money Laundering and terrorist financing risk assessment as well as other information provided by the Financial Intelligence Unit (FIU). On top of that, it is a requirement of the new regulations 17B that, a Reporting Person must establish and maintain policies, controls and procedures to mitigate and manage risks of money laundering and terrorist financing. Such policies must as well be regularly reviewed in accordance to the risk assessments.
Where there is potential high risk of money laundering or terrorist financing, Reporting Persons is required to apply Enhanced Customer due diligence measures and enhanced ongoing monitoring, in addition to the customer due diligence measures (Regulation 28A). The Enhanced due diligence must be applied where transaction or business relationship with a person established in a high-risk jurisdiction or in cross-border correspondent relationships or in where a customer has provided false or stolen identification documentation or information on establishing a relationship or if potential customer is a Political Exposed Person (PEP). In absence of high risk assessment, Reporting Person may undertake a simplified due diligence where the business relationship or transaction presents a low degree of risk of money laundering or terrorist financing.
ANTI-MONEY LAUNDERING (ELECTRONIC FUNDS TRANSFER AND CASH TRANSACTIONS REPORTING) REGULATIONS, 2019
The Anti-Money Laundering (Electronic Funds Transfer and Cash Transactions Reporting) Regulations, 2019 (GN No. 420 of 2019) is a new regulation which came into operating on 24th May 2019. The objective behind the enactment of these new regulations has been to monitor and control electronic Funds transfer as well as Cash Transactions in Tanzania.
Specifically, the regulations impose a requirement for Reporting Persons specifically Banks, Lawyers, Accountants, Operators of Gaming Activity to report to Financial Intelligence Unit (FIU) any transactions involving Tanzanian Shillings or any foreign currency equivalent to US$ 10,000 Dollars or more in the course of a single transaction. In reporting the transaction, the Reporting Person must provide information in a prescribed format which includes; Information of the Reporting Person, Information of the Transaction, information of the Person conducting the transaction, information of the beneficiary, among others. The regulations further stipulates that two or more transactions that are conducted within 24 hours that are equivalent of US$ 10,000 would be considered as single transaction hence required to be reported. The reporting of the transaction to FIU is required to be done within 5 working days from when the transaction occurred.
Regulation 6 imposes a specific requirement for Lawyers and Law firms to report currency transactions where they are engaged and dealing with transaction relating to the purchase or sale of real property or commercial enterprises; management of funds, securities or other assets which belong to a client; the opening or management of bank accounts, saving accounts or portfolios; the organization of contributions required to create, manage or direct corporations or legal entities; the creation, management or direction of corporations or legal entities including trusts, partnerships, or associations; buying or selling of business entities; acting on behalf of a client in any financial or real estate transaction.
Accountants and Accounting firms engaged in receiving or payment of funds, purchase or selling of securities, shares, real properties, management of funds have also been required pursuant to regulation 7 to report such currency transaction involved to FIU. The same requirement has been imposed under regulation 8 to operators of gaming activities (lotteries, casinos, betting etc.) whereby, money received from the customer or paid to the customer beyond US$ 10,000 must be reported to FIU.
Intermediary institutions i.e. Banks and Financial institutions involved in the transfer of such funds are now required to identify the parties involved in such transactions but, more importantly keep and store such transactional information for a period of 10 years. Such requirement comes along an order to require Financial Institutions not to process any transaction that does not comply or disclose the information required under the regulations.
The regulations creates an offences and imposes penalties for failure to submit the report accordingly. The penalties imposed includes administrative penalties as well as fines. Administrative penalties provided by the regulations entails; warning, a reprimand, directive to take remedial action, suspension of certain business activities, total suspension of business license, suspension or removal from office any staff who fails to comply. Likewise, the regulation imposes a monetary fines of TZS 1Million up to TZS 5Million per day from when the default was committed.
It is therefore important for the business community and the public in general to be aware on these new regulations as it imposes the obligations broadly to all reporting persons but, also require full and maximum disclosure of the parties involved in any financial transaction beyond US$ 10,000 for compliance with Anti-Money Laundering and Counter Finance Terrorism.
FIN & LAW -Client Update, JUNE 2019 – Tanzania Enhances Regulation on Money Transfer
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