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Financial Institutions Must Conduct Ongoing Due Diligence on Customer Relationships

As mandated by the Anti-Money Laundering and Combating the Financing of Terrorism Act (AMLPOCA) and the Anti-Money Laundering Act (AMLA), financial institutions in Tanzania must conduct ongoing due diligence on their customer relationships.

Ongoing Due Diligence Requirements

According to Section 10C(1)(b) of AMLPOCA and new Section 15A(1)(b) of AMLA, reporting persons must ensure that the documents, data, or information collected during the Customer Due Diligence (CDD) process are kept up-to-date and relevant by undertaking reviews of existing records, particularly for higher-risk customers.

Understanding Ownership and Control

Section 15A(2) of AMLA and new Section 10C(2) of AMLPOCA require reporting persons to understand the ownership and control of legal persons or arrangements, including information on the nature of each customer’s business.

Identifying and Verifying Customer Identity

Financial institutions must identify and verify the identity of customers and beneficial owners using reliable, independent source documents, data, or information. This includes verifying the identity of natural persons exercising control over legal persons or arrangements through other means.

Beneficiaries and Enhanced CDD Measures

The CDD measures also extend to beneficiaries designated by characteristics, class, or other means, requiring financial institutions to obtain sufficient information concerning the beneficiary to satisfy them that they will be able to establish the identity of the beneficiary at the time of payout.

Additionally, financial institutions must include a life insurance policy beneficiary as a relevant risk factor in determining whether enhanced CDD measures are applicable. If a beneficiary presents a higher risk, financial institutions must take reasonable measures to identify and verify the identity of the beneficial owner at the time of payout.

Verification of Customer Identity

Financial institutions must verify the identity of customers and beneficial owners before or during the course of establishing a business relationship or conducting transactions for occasional customers, or complete verification after the establishment of the business relationship, provided that this occurs sooner as reasonably practicable.

Benefits of Adhering to Regulations

By adhering to these regulations, financial institutions in Tanzania can ensure they are meeting their obligations under AMLPOCA and AMLA, while also mitigating the risks associated with money laundering and terrorist financing.