What’s New in the Anti-money Laundering Bill?

Money laundering offence, however, still remains an unbailable offence as no changes have been made to that effect.

On January 31, 2022, a special bill supplement was tabled before the Parliament via Government Gazette No.2. Vol. 102 of 2022. The bill is intended to amend the Anti-Money Laundering Act, 2006, and consequently, it is going to touch other related laws within Tanzania.

This is a third amendment after the 2012 and 2016 amendments respectively.

Previously, the Anti-Money Laundering Act applied only for the prevention and prohibition of money laundering activities. However, with these newly proposed provisions within the bill, its applicability is extended further to terrorist financing and proliferation financing.

If assented to become a law its provisions will, therefore, cater for the disclosure of information on money laundering, terrorist financing and proliferation financing, and also will establish a Financial Intelligence Unit and the National Multi-Disciplinary Committee on Anti-Money Laundering, Counter-Terrorist Financing and Counter-Proliferation Financing.

Presumably, you might be aware of terrorist financing but in case you are wondering what ‘proliferation financing’ is.

This refers to the act of providing funds or financial services which are used, in whole or in part, for the manufacture, acquisition, possession, development, export, trans-shipment, brokering, transport, transfer, stockpiling or use of nuclear, chemical or biological weapons and their means of delivery and related materials (including both technologies and dual-use goods used for non-legitimate purposes), in contravention of national laws or international laws.

A copy of the bill that was signed by Chief Secretary Ambassador Hussein Katanga contains various propositions, including making clarity on definitions of terms, adding administrative provisions, amplifying money laundering offences and providing for the general penalties as follows:

Five per cent of shareholding interest in a business is sufficient

Within the definition of terms, there is a proposed change within this bill regarding the ‘beneficial owner.’

Understandably, a person will be regarded as having direct control in a company or business arrangement if he or she has a huge shareholding percentage.

However, by this bill, five per cent shareholding interest is sufficient for a person to be regarded as having direct control.

Virtual currencies dealers

Further, the bill extends the meaning of ‘financial institution’ to include decentralized virtual currencies exchangers, wallet providers, payments processors or senders, and other virtual currency business models.

Addition of auditors and tax advisors as ‘reporting persons’

The other proposed change is with regards to the definition of a ‘reporting person.’

According to the Anti-Money Laundering Act, as it was previously, there were people who were expressly required to report suspicious transactions.

These included advocates, bankers, cash dealers, accountants, real estate agents, dealers in precious stones work of arts or metals, pension funds managers, securities market intermediaries, financial leasing entities, micro-financing service providers, and financing housing companies, auctioneers and others.

However, in these new proposals ‘auditors and tax advisers’ have been added to the list.

Definition of ‘proliferation financing’

The bill further expounds on the definition of ‘proliferation financing’ to mean an act by any person who by any means directly or indirectly, renders help or provides in whole or in part any assets, funds, economic resources, technology or services to any proliferation of weapons of mass destruction course or to any person or jurisdiction or for the benefit of any person designated by the United Nations Security Council to acquire, possess, broker, manufacture, develop, store, transport, convey, transfer, import or export nuclear, chemical or biological weapons and their means of delivery or related materials, including technologies and dual-use goods used for a non-legitimate purpose.

Members of committee

The bill further intends to establish a National Multi-Disciplinary Committee on Anti-Money Laundering Counter-Terrorist Financing and Counter-Proliferation Financing.

However, the composition of the new committee is a bit altered with the addition of new members like one representative from the National Prosecutions Service; one representative from the office of the Director of Public Prosecutions from Zanzibar; and one representative from the Tanzania Revenue Authority.

Other new members include one representative from the Zanzibar Revenue Board; one representative from the Business Registration and Licensing Agency; one representative from Zanzibar Business and Property Registration Agency; and one representative from the Ministry responsible for wildlife conservation one representative from the Zanzibar Anti-Corruption and Economic Crimes Authority.

Also, there is one representative from the Drug Control and Enforcement Authority and one representative from the Commission for National Coordination and Drug Control Zanzibar.

Money laundering to be tried as a standalone offence

One of the interesting propositions in this bill is to make money laundering as a separate offence.

According to this bill, a person can be convicted of money laundering without evidence on the source or the origin of the money he or she is trying to launder.

Usually, cases like these would require the prosecutor to satisfy himself that the money laundered was actually ‘dirty money’ and have a person convicted on that underlying offence before being convicted on money laundering.

This bill expressly states that the offence of money laundering shall be separate, independent and distinct from the crime underlying money laundering offence.

According to this provision, it shall not be necessary that a person first be convicted of the crime underlying money laundering offence, in order for that person to be convicted of money laundering in subsection.

But also, the conviction for the offence of money laundering shall not amount to conviction for the associated underlying crime to money laundering offence.

Requirement for reporting persons to conduct customer due diligence

The bill is introducing a new provision regarding customers due diligence.

Under this provision, reporting persons are required to among others, conduct customer due diligence in accordance with the identified risks-before establishing a business relationship; before carrying out an occasional transaction; when money laundering, terrorist financing or proliferation financing is suspected.

He or she will also need to conduct customer due diligence when the veracity or adequacy of documents, data or information previously obtained for the purposes of customer due diligence is doubted.

But also conduct ongoing customer due diligence after establishing a business relationship, including the updating of customer information.

Conviction of directors,  top officials in company

According to this bill proposition every director, manager, controller, principal officer or any person holding a similar position in a body corporate shall be deemed to have committed the offence unless that person proves that, the offence was committed without his consent or connivance and that he exercised such diligence to prevent the commission of the offence as he or she ought to have exercised, having regard to the nature of his or her functions in that capacity and to the circumstances pertaining to the commission of the offence.

Apart from the proposed provisions, the bill intends to amend other laws namely the Bank of Tanzania Act, Cap. 197; the Capital Markets and Securities Act, Cap. 79; the Insurance Act, Cap. 394; the Mutual Assistance in Criminal Matters Act, Cap. 254; the Prevention of Terrorism Act, Cap. 19; and the Proceeds of Crimes Act, Cap. 256.

A few changes are as follows:

Mutual assistance in undercover operations

Precisely the bill amends Thee Mutual Assistance in Criminal Matters Act that allows mutual assistance in criminal matters between Tanzania and Commonwealth countries and other foreign countries.

The bill is making an addition of carrying out undercover operations and control delivery as one of the aspects of mutual assistance.

Designation of domestic terrorists

This bill further amends the Prevention of Terrorism Act, to make an additional provision that empowers the minister responsible to declare any person, body corporate or unincorporated, to be a suspected domestic terrorist or terrorist body.

Generally, this is what the New Bill is intending to provide in the near future.

People can still give their opinion and inputs before it is signed by the President to become law.

Money laundering offence, however, still remains an unbailable offence as no changes have been made to that effect.

Emmanuel Mwesiga is experienced in commercial and corporate law transactions and advisory. He can be reached through e.mwesiga@yahoo.com or follow him on Twitter at @EsquireMK. These are the writer’s own opinions and do not necessarily reflect the viewpoints of The Chanzo Initiative. Want to publish in this space? Contact our editors at editor@thechanzo.com for further inquiries.

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