FINANCE AND CRIMINAL LAW UPDATE: LEGAL REQUIREMENT TO REPORT SUSPICIOUS CURRENCY TRANSACTIONS IN TANZANIA AND CONSEQUENCES OF FAILURE TO REPORT

• The requirement to report suspicious currency transactions
• Who has a duty to report?
• What is the reporting threshold?
• The relevance of reporting suspicious currency transactions
• Consequences of failure to report

1.0  Introduction

1. The Government of Tanzania enhances legitimacy of currency transactions by imposing various rules, guidelines and procedures which regulate currency Transactions in the country.
2. In this general legal update, touching on finance law and criminal law, Breakthrough Attorneys through its Banking and Finance Law department provides analysis of currency transactions’ reporting requirement as provided by various Anti-Money Laundering regulations.

2.0   The requirement to report suspicious currency transactions

1. Section 17(1) of the Anti-Money Laundering Act places an obligation for “reporting persons” to communicate to the Financial Intelligence Unit (FIU) on any “suspicious transaction” at lease within 24 hours after forming that suspicious.

reporting persons – means banks and financial institutions; cash dealers; accountants; real estate dealers; dealers in precious stones work of arts or metal; a regulator; customs officer; attorneys; notaries and other independent legal professionals, and auctioneers. (Section 3 of the Anti-Money Laundering Act)

suspicious transaction – means a transaction which to a person acting in good faith suspects or has grounds to suspect that funds or property are proceeds of crime, or are to be used for commission or continuation of a predicate offence.

3.0 Who has a duty to report?

1. The Anti-Money Laundering Act places a duty to report any suspicious transaction to reporting persons who are defined under Section 3 as defined above.

4.0  What is the reporting threshold?

1. Regulation 5 of the Anti-Money Laundering (Electronic Funds Transfer and Cash Transactions Reporting) Regulations, 2019 places a mandatory requirement for every reporting person to report to the Financial Intelligence Unit a currency transaction which involves Tanzania Shillings or any foreign currency equivalent to USD 10,000 or more in the course of a single transaction OR an Electronic Fund Transfer which involves Tanzania Shillings or any foreign currency equivalent to USD 1,000 or more in the course of a single transaction.

5.0  The relevance of reporting suspicious currency transactions

1. One may question why bother collecting information regarding suspicious transactions and report the same to the FIU?
2. Reporting any suspicion transaction to the FIU in relation to suspected money laundering and terrorist financing activities would give a room for FIU to analyze and disseminate intelligence to appropriate law enforcement agencies for investigation and further action.

6.0  Consequences of failure to report

1. The FIU as the regulator may, upon being satisfied that a reporting person has failed to report currency transaction or international electronic funds transfer according to these Regulations, impose administrative sanctions.
2. The FIU or regulator may impose any of the following administrative sanctions:-
   1. warning or caution not to repeat the conduct which led to non– compliance;
   2. a reprimand;
   3. directive to take remedial action or to make specific arrangement to remedy the default;
   4. restriction or suspension of certain business activities;
   5. a fine not exceeding five million shillings and not less than one million shillings per day for which a default is committed;
   6. suspending a business license; or
   7. suspension or removal from office of any member of staff who causes or fails to comply.
3. However, before imposing an administrative sanction, the FIU or regulator is required to give the reporting person notice in writing stating the nature of the alleged non – compliance; intention to impose administrative sanction; and the extent or particular of the intended administrative sanction.
4. Upon receiving written notice from the FIU or regulator, the reporting person may, in writing, within a period specified in the notice, but not later than five working days make representations as to why the administrative sanctions should not be imposed.

7.0  Conclusion

1. A reporting person is literally an extended agent of FIU. Hence, by complying to the Anti-Money Laundering (Electronic Funds Transfer and Cash Transactions Reporting) Regulations, 2019 and working closely to FIU, it will help the Unit to be a model Financial Intelligence Unit with state of the art technology that will help establish and maintain an internationally compliant and an effective anti-money laundering regime. This is expected and geared to provide a sound, dynamic and strong financial system for promotion of social justice, political stability and sustainable economic growth. It is Breakthrough Attorneys’ opinion that; sound AML laws and policies will dictate a sound inflow of FDI in the country.
2. Some specific sectors, such as Banking, Capital Markets have guidelines, which seek to ensure that reporting persons act accordingly. The Guidelines provides for training of staff, whistleblowing, monitoring and so forth, when red flags for Anti-Money Laundering and corrupt transactions are detected.
3. The guidelines tend to bind and guide companies as well as their employees. Example of such guidelines include: –

1. 1. The Financial Investigation Unit’s Anti-Money Laundering Guidelines to Collective Investment Schemes – Guideline No. 6
   2. The Financial Investigation Unit’s Anti-Money Laundering Guidelines to CMSA Licensees – Guideline No. 5
   3. The Anti-Money Laundering Guidelines for Verification of Customer’s Identities-Guideline No. 1
   4. The Anti-Money Laundering Guidelines for Banking Institutions-Guideline No. 2
   5. The Anti-Money Laundering Guidelines for Accountants and Auditors (issued by the National Board of Accountants and Auditors).
   6. The Anti-Money Laundering Guidelines for Bank of Tanzania-Guideline No. 3
   7. The Anti-Money Laundering and Counter-Terrorist Financing Guidelines to Insurers-Guideline No. 04

 

Important notice

This publication has been prepared for information purposes only, and it does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Breakthrough Attorneys, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.