Last updated: 25/06/2010
CENTRAL AUTHORITY FOR REPORTING
The Anti-Money Laundering Act (AMLA) 2006 created a Financial Intelligence Unit (FIU) as an extra-ministerial department of the Ministry of Finance. Section 4(2) of the AML Act 2006 empowers the FIU to receive, analyse and disseminate suspicious transaction reports and other information regarding potential money laundering or terrorist financing received from reporting persons and other sources.
There is also a National Multi-Disciplinary Committee on anti-money laundering, which assesses and improves anti-money laundering policies and advises the government on anti- money laundering and other related matters.
OTHER ANTI-MONEY LAUNDERING REGULATOR(S).
ARE LAWYERS COVERED BY ANTI-MONEY LAUNDERING LEGISLATION?
Lawyers are covered under the Anti-Money Laundering Act 2006. Lawyers fall under the category of “Reporting Persons” under the AML Act 2006 (please see Section 3).
They are only covered by the Act when they act on behalf of a client in any financial or real estate transaction or when they assist clients in preparing or executing transactions involving:
The purchase or sale of real property or commercial enterprises;
Management of funds, securities or other assets which belong to a client;
The opening or management of bank accounts, saving accounts or portfolios;
The organization of contributions required to create, manage or direct corporations or legal entities;
The creation, management or direction of corporations or legal entities; and
The buying, or selling of business entities.
LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.
The Anti-Money Laundering Act, 2006 Act No. 12 of 2006
"An Act to make better provisions for prevention and prohibition of money laundering, to provide for the disclosure of information on money laundering, to establish a Financial Intelligence Unit and the National Multi-Disciplinary Committee on Anti-Money Laundering and to provide for matters connected thereto".
The Anti-Money Laundering Regulations 2007, Government Notice Number 195 published on 14th September 2007. These Regulations are made by the Minister responsible for Money Affairs pursuant to provisions of Section 29 of the Anti-Money Laundering Act, 2006.
The Registration Insolvency & Trusteeship Agency Act (RITA
Laws applicable to lawyers:
Note that lawyers in Tanzania, like other professionals, are also regulated by the Advocates Act and the rules made there under, as well as the Rules of Professional Conduct and Etiquettes.
ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?
Yes, visiting lawyers are subject to the local anti-money laundering legislation, among other laws. There are provisions under the anti-money regulations for citizens and residents and provisions for foreign nationals (please see part II of the Anti-Money Laundering Regulations, ie, Regulations 3, 4, 5).
Moreover, there is a legal procedure for visiting lawyers under normal circumstances. They are required to fulfil the necessary requirements and comply with the National Bar Association and Immigration conditions before they are allowed to proceed to render legal services.
They are bound to provide sufficient identification documents and references from their countries of practice. While carrying on any business in Tanzania, they are bound to comply with all the applicable local laws, including the ones that relate to anti-money laundering.
LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.
Guidelines for the Verification of Customers’ Identities. This has been published by the Financial Intelligence Unit in accordance with its duties stipulated by the AMLA 2006.
IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?
The Law Society is very much involved. Tanganyika Law Society is established by an Act of Parliament (Act No. 30 of 1954 –Revised in 2006). One of the objectives of the society is to assist the government and the courts in all matters affecting legislations, administration and the practice of law Tanzania.
It is one of the main stakeholders in the National Law Reform Commission in Tanzania. Hence, hugely responsible for the revision of laws in Tanzania including Anti-Money Laundering Act 2006.
The society operates under two limbs, which are the Secretariat and the various Committees. The Standing Law Committee is much involved in legal reforms. In the year 2009 the Society convened a seminar specifically designed to educate and sensitize members on anti-money laundering law and practice.
DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.
Section 15 of the AMLA 2006 stipulates that a lawyer shall take reasonable measures to satisfy himself as to the true identity of any applicant seeking to enter into a business relationship with him or to carry out a transaction or series of transactions with him, by requiring the applicant to produce an official record reasonably capable of establishing the true identity of the applicant.
This official record is defined as:
- A birth certificate or an affidavit to that effect;
- A passport or other official means of identification;
- In the case, of a corporation, a copy of the organization’s Memorandum and Articles of Association and a certificate of incorporation together with the latest annual reports certified by the Registrar of Companies; and
- Any other documents as may be prescribed by the Minister in the regulations.
Additionally, where it appears to a lawyer that an applicant requesting him to enter into any transaction, whether or not in the course of a continuing business relationship, is acting on behalf of another person, the reporting person shall take reasonable measures to establish the true identity of any person on whose behalf or for whose ultimate benefit the applicant may be acting in the proposed transaction, whether as trustee, nominee, agent or otherwise.
The Guidelines for the Verification of Customers’ Identities issued by the FIU further elaborate on due diligence measures.
If the client is a natural person, lawyers shall verify the client’s information by:
- Comparing full names with official documents;
- Confirming the date of birth and nationality from an official document;
- Confirming the permanent address using such things as utility bills, bank statements, a letter from a public authority, embassy or consular office, recent lease or rental agreement;
- Contacting the customer by telephone, by letter or by email to confirm the information supplied before and after the relationship has been established.
If the client is an entity, lawyers shall verify the client’s information by:
- Reviewing a copy of the latest periodical reports and accounts (for established corporate entities);
- Conducting an enquiry confirming submitted documents;
- Communicating with registered authorities on the authenticity of registration certificates;
- Undertaking an entity search to ensure that the entity has not been, or is not in the process of being, dissolved, struck off, wound up or terminated;
- Utilising an independent information verification process, including accessing public and private databases;
- Comparing the registered name, registration number and registered address with the most recent official Memorandum and Articles of Association / establishment deeds or constitutional/ governing documents and version of the Certificate of Incorporation/ registration bearing the stamp of the incorporating / registering authority;
- Comparing the trade name and business address with information which can be reasonably be expected to achieve such verification like visiting the entity, where practical;
- Contacting the entity by telephone, mail or email;
- Comparing the Tax Identification Number with documents issued by the Tanzania Revenue Authority bearing such a number; and
- For foreign entities, by comparing the particulars with an official document issued by an authority for recording the incorporation and registration of entities in that country.
Additionally, collecting residential address and contact particulars of the Directors, shareholders who hold 5% of more of the voting rights at a general meeting of the entity concerned and agents of the entity.
DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?
Yes. Section 15(5) AMLA 2006 states that in determining what constitutes reasonable measures for the purposes of client and beneficiary due diligence and enhanced client due diligence all the circumstances of the case shall be taken into consideration, and in particular:
- To whether the applicant is a person based or incorporated in a country in which there are provisions in force applicable to it to prevent the use of the financial system for the purpose of money laundering or terrorist financing; and
- To custom and practice as may be current in the relevant field of business.
Additionally, the Guidelines for the Verification of Customers’ Identities issued by the FIU stipulate taking a more cautious approach for non-face-to-face customers by taking measures such as:
- Certification of documents presented;
- Requisition of additional documents to complement those that are required for face to face customers;
- Independent contact with the customer by the lawyers; and
- Third party introduction.
ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?
Yes. Enhanced due diligence measures apply to politically exposed persons. When seeking to establish a business relationship with such clients, in addition to performing normal due diligence measures, a lawyer must:
- Have appropriate risk management systems to determine whether the customer is a politically exposed person;
- Obtain senior management approval for establishing a business relationship with such a customer;
- Take reasonable measures to establish the source of wealth and source of funds; and
- Conduct enhanced on-going monitoring of the business relationship.
ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?
Yes. Section 15(6) AMLA 2006 provides an exception to the requirement of the production of evidence of identity when:
- The client himself is a reporting person under the AMLA 2006. This includes banks and financial institutions; cash dealers; accountants; real estate agents; dealers in precious stories or metals; regulators; customers officers and any other person whom the Minister may, by notice published in the Gazette specifically; and
- There is a transaction or series of transactions taking place in the course of a business relationship, in respect to which the client has already produced satisfactory evidence of identity.
ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.
Yes, they are permitted, but subject to verification of the information and preparation of the requisite report in accordance with Section 17 of the AMLA 2006.
WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?
According to Sections 17, 18 and 19 of the Anti-Money Laundering Act, lawyers have the responsibility of reporting suspicious transactions to the FIU.
Under Section 17, a lawyer is obliged to report to the FIU where he suspects or has grounds to suspect that funds or property are proceeds of crime, or are related or linked to or are to be used for commission or continuation of a predicate offence or has knowledge of a fact or an activity that may be an indication of money laundering or predicate offence.
Should a suspicion be formed, a lawyer shall, within twenty four hours, after forming that suspicion and, wherever possible, before any transaction is carried out:
Take reasonable measures to ascertain the purpose of the transaction or proposed transaction, the origin and ultimate destination of the funds or property involved, and the identity and address of any ultimate beneficiary; and
Prepare a report of the transaction or proposed transaction and communicate the information to the FIU by any secure means as may be specified by FIU.
A report required under subsection 1 of Section 17 shall contain such particulars as may be specified in the Regulations to be made.
Any person who contravenes the provisions of reporting a suspicious transaction shall, on conviction:
If the person is an individual, be liable to a fine not exceeding 5,000,000 shillings or imprisonment for a term not exceeding 5 years;
If the person is a body corporate, be liable to a fine of not exceeding 10,000,000 million or three times the market value of the property, whichever is greater.
DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?
No. Section 21 of the AMLA 2006 makes it clear that no obligation on secrecy shall affect the requirement of disclosure of any information imposed by the law.
DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?
Yes. Section 22 of the AMLA 2006 provides a complete indemnity for any lawyer who has reported a suspicious transaction following a report transmitted in good faith under the AMLA 2006 whether or not the suspicion proved to be well founded.
ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?
A lawyer does not act on suspicion, but on proof. The justice system in Tanzania is based on the principles of innocence before being proven guilty and the right to be heard. These are constitutional rights, which lawyers must guard.
A lawyer is allowed to proceed as long as he adheres to the relevant laws, regulations and the Rules of Conduct and Professional Etiquettes.
IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.
Yes, Section 20 of the AMLA 2006 contains a tipping off prohibition on information that a suspicious transaction report is prepared or is being prepared and any other related information.
A person found guilty of contravening the tipping-off prohibition is liable:
- In the case where the person is an individual, to a fine of not less than 100,000,000 shillings or to an imprisonment for a term of not less than 5 years;
- In the case where a person is a body corporate, to a fine not less than 500,000,000 shillings or 3 times the market value of the property, whichever is greater.
DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.
- Section 15 of the AMLA 2006, stipulates that when accepting a new client, the lawyer should verify the client’s identity through taking reasonable measures to satisfy himself as to the true identity of any client;
- Under Section 15 (2) the official records required from a new client include and are not limited to, a birth certificate/or affidavit to that effect, a passport or other official means of identification.
In case it is a corporation, certified copies of the Memorandum and Articles of association together with latest annual reports certified by the Chief Executive Officer of the Business Registration and Licensing Authority and any other documents as may be prescribed by the Minister in the regulations are required.
ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.
Yes. Section 15(3) of the AMLA 2006 stipulates that where an applicant requests a lawyer to enter into a continuing business relationship; in the absence of such a relationship, with any transaction, the lawyer shall take reasonable measures to establish whether the person is acting on behalf of another person.
Section 16 states that a lawyer must establish and maintain records of all transactions of such amount or currency as the Minister may ordain, by order published in the Gazette. Such records must contain particulars sufficient to identify:
- The name, address and occupation or where appropriate business or principal activity, of each person:
- Conducting the transaction;
- If known, on whose behalf the transaction is being conducted, as well as the method used by the reporting person to verify the identity of each such person.
- The nature and date of the transaction;
- The type and amount of currency involved;
- The type and identifying number of any account with the reporting person involved in the transaction;
- If the transaction involves a negotiable instrument other than currency, the name of the drawer of the instrument, the name of the institution on which it was drawn, the name of the payee, if any, the amount and date of the instrument, the number, if any, of the instrument and details of any endorsements appearing on the instrument; and
- The name and address of the reporting person, and of the officer, employee or agent of the reporting person who prepared the record.
These records must be kept for a period of at least 5 years from the date the transaction was completed.
DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.
Section 18 of the AMLA 2006 states that lawyers must establish and maintain internal reporting procedures:
By designating a person to whom its employees are to report any suspicious transaction—that another person is engaged in money-laundering or an act constituting a predicate offence –which comes to the employee's attention in the course of employment;
for enabling a designated person to have reasonable access to information that may be relevant to determining whether sufficient basis exists to report the matter pursuant to section; and
Requiring the designated person to report the matter pursuant to section 17, in the event that he determines that sufficient reasons exist.
Additionally, Section 19 states that a lawyer shall take appropriate measures for the purpose of making employees aware of domestic law relating to money laundering and terrorist financing, and the procedures and related policies established under the AMLA; and provide its employees with appropriate training in the recognition and handling of transactions relating to money laundering or financing of terrorism.
Under Section 12, there is a universal criminal liability for anyone who engages in, converts or transfers, conceals, acquires or participates in any acts associated with money laundering.
HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?
HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?
Tanzania is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a regional styled FATF. The ESAAMLG conducted a mutual evaluation of Tanzania in November 2008, which was scheduled for adoption in 2009. Thus far, there is no evidence that this report has been adopted nor is there a text of the report online.
According to the INCSR Report 2009, The US Department of State made the following recommendations to Tanzania’s Anti-money laundering regime:
- The Government of Tanzania should focus its efforts on practical implementation of the AML Act, including dedicating the resources necessary to build an effective FIU;
- The FIU should continue its efforts to hire additional staff to ensure that financial institutions are adequately supervised, to inform them of their reporting and record-keeping responsibilities, and to train the financial sector to identify suspicious transactions;
- Authorities should ensure that the Prevention of Terrorism Act comports with international standards and that that the government implements all provisions in the law;
- The government should also improve its cross-border cash declaration regime;
- Tanzania should examine vulnerabilities that it has not yet addressed, in particular the inherent vulnerabilities of alternative remittance systems and trade, and any additional weaknesses posed by the less-regulated neighbouring country Zanzibar.
Please see also INCSR Country Reports 2009 for more country information.
Information provided by:
Godson Hudson Nyange (Advocate)
House No. 501 / B
Corner of Haile Selassie / Ghuba Road
P. O. Box 5649
Dar es salaam
Tanzania - East Africa
Tel: +255 22 2600734 Fax +255 22 2600735
Mobile + 255 784 667 766