June 12, 2019

New Regulations on Electronic Funds Transfer and Cash Transaction Reporting

As part of more robust anti-money laundering measures, the Tanzanian government has recently released the new Anti-Money Laundering (Electronic Funds Transfer and Cash Transaction Reporting) Regulations, 2019 (the Regulations). The Regulations introduce stricter reporting guidelines, as well as mandatory reporting formats.

This Finance Briefing provides an overview of some of the relevant provisions of the Regulations to ensure professionals are more aware of their heightened obligations.  

NO. RELEVANT Provision OVERVIEW
1.

Information to be contained in Electronic funds transfer and currency transaction (regulation 4 and the schedules of the Regulations)

This provision requries that banks, accountancy firms and other similar persons (Reporting Persons) collect a range of information whenever they process electronic funds transfers (either domestic or international) or currency transactions (any cash-based transaction involving deposit, withdrawal, exchange, payment or receipt of currency in Tanzanian Shillings or any foreign currency).

Amongst other information, the following must be collected:

  • full address and place of business where the transaction occurred

  • date and time of the transaction

  • value of the transaction

  • identity documents of the parties involved in the transaction

2.

Obligation to report currency transactions and electronic fund transfers (regulation 5 of the Regulations)

This provision requires that Reporting Persons report to the Financial Intelligence Unit, any currency transaction in Tanzanian Shillings or foreign currency that is equivalent to US $10,000 or more in the course of a single transaction.

This provision further asserts that Reporting Persons must report to the Financial Intelligence Unit, an electronic funds transfer involving Tanzanian Shillings or foreign currency that is equivalent to US $1,000 or more, in the course of a single transaction.

When reporting currency transactions or electronic funds transfers, Reporting Persons shall fill in and provide the information set out in the Schedules to the Regulations.

In determining the exchange rate for the purposes of knowing whether to report a particular transaction or not, Reporting Persons must pay regard to the official conversion rate of the Bank of Tanzania that is in effect at the time of the transaction.

3.

Circumstances where attorneys, notaries and independent legal professionals shall report currency transactions (regulation 6 of the Regulations)

This provision requires that every attorney, notary or independent legal professional report to the Financial Intelligence Unit, when they engage in the following types of activities:

  • assisting a client in preparing or executing transactions involving the purchase or sale of real property or commercial enterprises

  • assisting a client in preparing or executing transactions involving management of funds, securities or other assets which belong to the client

  • assisting a client in preparing or executing transactions involving the opening of bank accounts, saving accounts or portfolios

  • assisting a client in preparing or executing transactions involving the organisation of contributions required to create or manage or direct corporations or legal entities

  • assisting a client in preparing or executing transactions involving the creation, management or direction of corporations or legal entities including trusts, partnerships, or associations

  • assisting a client in preparing or executing transactions involving the buying or selling of business entities

  • acting on behalf of a client in any financial or real estate transaction

The Regulations make it clear that the above shall apply to all sole practitioners, partners or employed professonals within professional firms when they engage in any of the aforementioned activities.

4.

Circumstances where accountants shall report currency transactions (regulation 7 of Regulations)

This provision requires that every accountant or accounting firm report to the Financial Intelligence Unit, when they engage in the following types of activities:

  • receiving or paying funds on behalf of any person or entity
  • purchasing or selling securities, shares, real properties or business assets or entities  on behalf of any person or entity

  • transferring funds or securities by any means on behalf of any person or entity

  • managing funds on behalf of any person or entity

  • giving instructions on behalf of any person or entity in respect of any of the aforementioned activities

The Regulations make it clear that the above shall apply to all sole practitioners, partners or employed accountants within accounting firms when they engage in any of the aforementioned activities on behalf of their employer.

5.

An ordering institution to maintain information (regulation 9 of Regulations)

If a Reporting Person transfers funds on behalf of a client, they will be regarded as an "ordering institution".

This provision requires that ordering institutions maintain all information that it collects from its clients for a minimum period of 10 years.

6.

Format and period of reporting (regulation 12 of Regulations)

This provision requires that all Reporting Persons report to the Financial Intelligence Unit, electronically or as otherwise required by the Financial Intelligence Unit, within 5 working days of the date of the relevant transaction or transfer.
7.

Imposition of administration sanctions (regulation 13 of Regulations)

If Reporting Persons fail to comply with the Regulations, the Financial Intelligence Unit or the regulator may, after providing notice in writing to the Reporting Persons, impose any of the following administrative sanctions:

  • a warning or caution not to repeat the default
  • a reprimand

  • a directive to take remedial action or to make specific arrangements to remedy the default

  • restriction or suspension of certain business activities

  • a maximum daily fine of Tanzanian Shillings 5,000,000 (approximately  US $2,175), for each day the default was committed

  • suspending or removing from office any member of staff who fails to comply

As at the date of this Finance Briefing, the Regulations are publicly available.

Clyde & Co Tanzania's finance and real estate team have the legal expertise to support borrowers, property owners / developers and investors that may have any questions on the Act and its implications on the use of landed property to secure debt. We are available to respond to any legal questions you may have on the subject.

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