Reasons behind failure to complete CDD measures by financial institutions in Tanzania
===========================================================
CMSA licensee’s inability or unwillingness to provide information leads to withdrawal of business applications and transactions
In a shocking revelation, it has come to light that some financial institutions licensed by the Capital Markets and Securities Authority (CMSA) are unable or unwilling to complete Customer Due Diligence (CDD) measures, leading to the withdrawal of business applications and transactions.
Failure to provide information
According to sources within the CMSA, several licensees have been found to be reluctant or unable to provide information requested by the regulator, prompting them to withdraw pending applications to establish business relations or terminate existing ones.
Importance of CDD measures
The CDD measures are a crucial component of anti-money laundering (AML) and counter-terrorism financing (CFT) regulations, aimed at preventing financial institutions from being used for illegal activities. The CMSA has emphasized the importance of these measures in its guidelines, which were implemented in 2012.
Requirements under the guidelines
Under the guidelines, financial institutions are required to:
- Develop and implement internal policies, procedures, and controls to prevent money laundering and terrorist financing
- Conduct regular training sessions for employees and agents on AML/CFT laws and regulations, as well as prevailing techniques and trends in money laundering and terrorist financing
- Maintain an audit function that is adequately resourced and independent
- Have screening procedures in place when hiring employees and agents
Consequences of non-compliance
Failure to comply with these guidelines can result in severe consequences, including the withdrawal of business applications and transactions.
Industry experts’ concerns
Industry experts say that the failure by some financial institutions to complete CDD measures is a serious concern that must be addressed urgently. “It’s unacceptable that some financial institutions are not taking their AML/CFT obligations seriously,” said one expert. “This can have serious consequences for the stability of the financial system and the integrity of our economy.”
CMSA’s stance
The CMSA has promised to take stern action against any institution found to be non-compliant with its guidelines. In a statement, the regulator emphasized that it would not tolerate any laxity in implementing AML/CFT measures.
“We will not hesitate to take disciplinary action against any institution that fails to comply with our guidelines,” said the CMSA Commissioner. “We are committed to ensuring that our financial institutions operate in a transparent and accountable manner.”
Conclusion
The failure by some financial institutions to complete CDD measures is a serious concern that must be addressed urgently. The CMSA has emphasized the importance of these measures and has promised to take stern action against any institution found to be non-compliant.