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Due Diligence Procedures for Financial Institutions in Tanzania, United Republic of

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The Financial Intelligence Unit (FIU) of the United Republic of Tanzania has issued guidelines for financial institutions to ensure compliance with anti-money laundering and combating the financing of terrorism (AML/CFT) regulations. The guidelines aim to prevent money laundering and terrorist financing by providing a framework for due diligence procedures.

Introduction

The AML/CFT Act, Cap. 423, was enacted to prevent and prohibit money laundering, provide for the disclosure of information on money laundering, establish a Financial Intelligence Unit, and provide for matters connected thereto. The Bank of Tanzania (BOT) is one of the regulatory authorities empowered by the Act.

Compliance with AML/CFT Regulations

Financial institutions in Tanzania must comply with the AML/CFT Act, Cap. 423, Anti-Money Laundering Regulations, 2007, and guidelines issued by the FIU. The BOT is responsible for ensuring that banking institutions under its jurisdiction comply with all provisions of the Act and regulations.

Key Requirements

  • Board-approved AML/CFT policies and procedures must be in place.
  • Institutions must implement effective AML/CFT controls to prevent money laundering and terrorist financing.

Policies, Procedures, and Controls

The BOT must ensure that banking institutions have board-approved AML/CFT policies and procedures in place. Institutions under the BOT’s jurisdiction must implement effective AML/CFT controls to prevent money laundering and terrorist financing.

On-Site Inspections

  • The BOT should conduct on-site inspections to ensure compliance with AML/CFT regulations.
  • The FIU should be notified of any suspicious transactions or potential breaches of AML/CFT regulations.

Staff Training and Awareness

The BOT should develop and implement a training program for staff on AML/CFT issues. Banking institutions must also train their staff adequately in AML/CFT issues.

Key Requirements

  • All staff members must receive adequate training on AML/CFT issues.
  • Institutions must ensure that all employees are aware of the importance of AML/CFT compliance.

Know Your Customer, Customer Due Diligence, and Customer Identity Verification

Financial institutions must have sound Know Your Customer (KYC), Customer Due Diligence (CDD), and Enhanced Due Diligence (EDD) policies and procedures for high-risk customers and transactions. Institutions must also retain records of customer identification and transactions.

Key Requirements

  • Institutions must conduct thorough KYC, CDD, and EDD checks on all customers.
  • Records of customer identification and transactions must be retained for a minimum period of 5 years.

Reporting Suspicious Transactions

Financial institutions must report suspicious transactions to the FIU in a timely and appropriate manner. Institutions should establish contact points with the FIU for handling AML/CFT issues, including reported suspicious transactions.

Key Requirements

  • Institutions must report all suspicious transactions to the FIU.
  • Institutions should establish contact points with the FIU for handling AML/CFT issues.

Money Laundering Reporting Officer

Each banking institution should appoint a Money Laundering Reporting Officer (MLRO) who will be responsible for AML/CFT issues, including ensuring timely and appropriate reporting of suspicious transactions to the FIU.

Key Requirements

  • Each institution must appoint an MLRO.
  • The MLRO is responsible for ensuring timely and appropriate reporting of suspicious transactions to the FIU.

Review of Guidelines

The BOT is encouraged to compile any comments or concerns related to the implementation of these guidelines and forward them to the FIU for review.

Effective Date

These guidelines become effective on April 1, 2009.

Conclusion

The guidelines issued by the FIU provide a framework for financial institutions in Tanzania to ensure compliance with AML/CFT regulations. The guidelines aim to prevent money laundering and terrorist financing by providing a due diligence process for financial transactions.