Tanzania

**Lack of Specific Licensing Regime:** There is no specific law or regulation in Tanzania that explicitly defines, regulates, and provides for the licensing of cryptocurrency exchanges, custody providers, or payment processors as virtual asset businesses.

**Historical Context:** In 2021, following comments from President Samia Suluhu Hassan encouraging the Bank of Tanzania to explore cryptocurrency, there was a surge of optimism about forthcoming regulation. The BOT announced it was working on a framework, and the Capital Markets and Securities Authority (CMSA) also indicated its readiness to regulate digital assets that fall under the purview of securities.

**Current Stance (Implied):** While formal prohibition may not be explicit in specific crypto legislation, the lack of a regulatory framework and the BOT's historical cautious stance on unregulated financial activities mean that operating an unlicensed crypto business could face significant legal uncertainty and potential challenges under existing general financial laws.

**Custody Providers:** If a provider holds significant assets on behalf of clients, it could potentially be viewed through the lens of trust services or asset management, which are typically regulated.

**Payment Processors:** Companies facilitating payments using virtual assets, especially if they involve conversions to/from fiat currency, might be subject to the existing **National Payment Systems Act, 2015** (and its regulations) administered by the Bank of Tanzania, depending on the interpretation of "payment system" and "electronic money."

**Currently Undefined:** Since there is no specific regime, the distinction between registration and licensing for virtual assets is currently moot.

**Future Outlook:** If a regime were to be introduced, it would likely involve:

**Licensing:** For core VASP activities (exchanges, custody, issuance of certain tokens), implying a higher level of regulatory oversight, capital requirements, and ongoing compliance.

**Registration:** Potentially for less risky activities or for initial market entry, or as a component of a broader licensing framework.

**Currently:** No specific capital requirements for crypto businesses as there's no dedicated license.

**Future/Hypothetical:** If regulated under existing laws (e.g., as a payment system provider or financial institution), then the capital requirements for those specific licenses would apply. These can vary significantly depending on the nature and scale of activities. A dedicated crypto license would almost certainly come with prescribed minimum capital.

**HIGHLY LIKELY & CRITICAL:** Even without a specific crypto licensing regime, Tanzania has a robust **Anti-Money Laundering Act, 2006** (and subsequent amendments/regulations) and a **Financial Intelligence Unit (FIU)**. Financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs) are obligated to comply with AML/CFT (Anti-Money Laundering and Combating the Financing of Terrorism) requirements.

Virtual asset service providers, if operating, would be expected to implement robust KYC (Know Your Customer) and AML procedures, including customer due diligence, transaction monitoring, record-keeping, and suspicious transaction reporting to the FIU. This aligns with FATF (Financial Action Task Force) recommendations, which Tanzania adheres to.

**Highly Likely:** For any regulated financial service, a local presence (e.g., a locally incorporated entity, physical office, local management) is typically a prerequisite in Tanzania. This would almost certainly be a requirement for any future crypto licensing.

**Future/Hypothetical:** Should a framework emerge, the application process would likely involve:

Submission of a detailed application form.

Provision of business plans, operational policies, risk management frameworks, and AML/KYC policies.

Fit and proper assessment for directors, shareholders, and key personnel.

Demonstration of technical capabilities and cybersecurity measures.

Payment of application and licensing fees.

**Role:** The central bank responsible for monetary policy, financial sector regulation (including payment systems), and financial stability. Any future crypto framework is highly likely to involve the BOT, especially concerning stablecoins or payment-related virtual assets.

**Relevant Law (General):** **The National Payment Systems Act, 2015**. While not crypto-specific, it regulates payment systems and services in Tanzania.

Relevant Publications (search for "National Payment Systems Act" or related regulations under Publications/Laws & Regulations): https://www.bot.go.tz/Publications

**Capital Markets and Securities Authority (CMSA):**

**Role:** Regulator of capital markets and securities in Tanzania. The CMSA would likely be involved if certain virtual assets are classified as securities (e.g., security tokens, investment contracts).

**Relevant Law (General):** **The Capital Markets and Securities Act, Cap 79 R.E. 2002 (as amended)**.

**Financial Intelligence Unit (FIU) Tanzania:**

**Role:** The central national agency for receiving, analyzing, and disseminating financial intelligence to combat money laundering and terrorist financing.

**Relevant Law:** **The Anti-Money Laundering Act, 2006 (and subsequent amendments)**, and its regulations. All financial institutions and designated non-financial businesses are subject to these laws.

FIU Website (Tanzania): https://www.fiu.go.tz/ (Note: Direct access to the full Act might be through the Attorney General's Chambers or legal databases, but the FIU site provides context and guidance.)

**Assume AML/KYC obligations** as per existing Tanzanian law and international standards (FATF).

**Seek expert legal advice** within Tanzania to assess any potential applicability of existing financial services laws to their specific activities and to stay informed on new regulations.

**The Anti-Money Laundering Act (AMLA), 2006 (as amended):** This is the principal legislation establishing the legal framework for combating money laundering. It defines "financial institutions" and "other reporting institutions" and imposes obligations on them. While VASPs may not be explicitly listed, their activities are likely to be interpreted as falling under the scope of financial services or other reporting obligations.

**The Anti-Money Laundering Regulations, 2012 (as amended):** These regulations provide detailed rules and procedures for implementing the AMLA, including customer due diligence, suspicious transaction reporting, and record-keeping.

**The Anti-Terrorism Act, 2002 (as amended):** This act provides the legal framework for combating terrorism financing.

**Identification and Verification of Customers:**

**Natural Persons:** Collecting and verifying full legal name, date of birth, residential address, nationality, national identification number (e.g., National ID, passport, driver's license). Verification should be done using reliable, independent source documents, data, or information.

**Legal Entities (Companies, Partnerships, etc.):** Collecting and verifying official name, registration number, address of registered office, names of directors/partners, legal form, proof of existence (e.g., certificate of incorporation).

**Beneficial Ownership:** Identifying and verifying the identity of the ultimate beneficial owner(s) of the virtual assets or the entity, ensuring that the VASP knows who ultimately owns or controls the funds/assets.

**Purpose and Intended Nature of the Business Relationship:** Understanding the purpose and intended nature of the customer's virtual asset activities and the business relationship.

**Ongoing Monitoring:** Continuously monitoring the business relationship and transactions undertaken by the customer to ensure that they are consistent with the VASP's knowledge of the customer, their business, and risk profile. This includes monitoring for unusual or suspicious activities.

**Enhanced Due Diligence (EDD):** Applying EDD for higher-risk situations, which may include:

Transactions involving Politically Exposed Persons (PEPs).

Customers from high-risk jurisdictions (as identified by FATF or local authorities).

Complex, unusually large transactions, or unusual patterns of transactions that have no apparent economic or lawful purpose.

New technologies or products that favor anonymity, which is often a characteristic of some virtual asset transactions.

**Obligation to Report:** Any VASP, or its employees, that knows or suspects that a transaction (or attempted transaction) involves funds or virtual assets derived from illegal activity, or is related to money laundering or terrorism financing, must report it.

**What Constitutes Suspicion:** Suspicion can arise from various factors, including unusual transaction patterns, inconsistent customer information, lack of clear economic purpose, or involvement of high-risk jurisdictions.

**Reporting Mechanism:** Reports must be submitted to the FIU Tanzania promptly and without delay, typically through a prescribed format (e.g., an online portal or specific form).

**No Tipping-Off:** VASPs and their employees are prohibited from "tipping-off" customers or third parties that an STR has been or will be submitted.

**Duration:** All records must be kept for a minimum period of **five (5) years** after the business relationship has ended or after the date of the transaction.

All customer identification and verification data.

Business correspondence related to the customer relationship.

Records of all virtual asset transactions, including transaction dates, amounts, types of virtual assets, sending and receiving addresses (if applicable), and originating/beneficiary information.

Records of all suspicious transaction reports filed.

Records of internal policies and procedures for AML/CFT compliance.

**Accessibility:** Records must be maintained in a manner that allows for easy retrieval by competent authorities upon request.

**Financial Intelligence Unit (FIU Tanzania):** This is the primary body responsible for receiving, analyzing, and disseminating suspicious transaction reports and financial intelligence related to money laundering and terrorism financing. The FIU also provides guidance on AML/CFT compliance.

**Bank of Tanzania (BoT):** As the central bank, BoT is the primary regulator for financial institutions and is responsible for overall financial sector stability and supervision. While they have historically been cautious regarding crypto, any future formal licensing or prudential regulation of VASPs would likely fall under their purview. They have also indicated an openness to exploring virtual assets, which may lead to a more defined regulatory stance.

**Evolving Landscape:** The regulatory environment for virtual assets is dynamic globally and locally. VASPs should continuously monitor for new laws, regulations, or guidance from Tanzanian authorities.

**Risk-Based Approach:** VASPs are expected to implement a risk-based approach to AML/CFT, meaning they should assess their specific risks (customer type, products, services, delivery channels, geographical areas) and apply controls commensurate with those risks.

**FATF Standards:** Tanzania is expected to align with the recommendations of the Financial Action Task Force (FATF), particularly FATF Recommendation 15 on New Technologies and its Interpretive Note on Virtual Assets and VASPs. This means adhering to the "travel rule" (which requires VASPs to obtain and transmit originator and beneficiary information for virtual asset transfers) and having a robust internal compliance program.

**Legal Counsel:** Given the evolving nature and the lack of highly specific VASP legislation, it is highly advisable for any VASP operating or intending to operate in Tanzania to seek local legal counsel specializing in financial regulation and AML/CFT to ensure full compliance.

**The Anti-Money Laundering Act, 2006 (as amended):** This is the primary law combating money laundering. It designates "reporting persons" (financial institutions and certain non-financial businesses and professions) who are obliged to implement customer due diligence (CDD), record-keeping, transaction monitoring, and suspicious transaction reporting (STR) measures. While VASPs may not be explicitly listed, if they offer services that fall under the broader definitions of financial services or property, they could be captured.

**The Prevention of Terrorism Act, 2002 (as amended):** This act provides the legal framework for combating terrorism financing, including measures for freezing assets of designated terrorist organizations and individuals.

**Bank of Tanzania (BOT):** The central bank, responsible for monetary policy and financial sector regulation. It has issued warnings regarding crypto assets but has also explored potential regulatory approaches.

**Financial Intelligence Unit (FIU):** The national center for receiving, analyzing, and disseminating suspicious transaction reports (STRs) and other financial information related to money laundering and terrorist financing.

**Current Stance on Crypto:** The BOT has generally maintained a cautious stance, warning the public about the risks associated with investing in and using cryptocurrencies, often citing their speculative nature, volatility, and lack of regulation. In 2021, the former President hinted at the need to prepare for and potentially regulate crypto, but concrete steps for a full regulatory framework for VASPs are still pending.

**Implication for Crypto (if permitted/regulated):** If VASPs were to operate under a formal regulatory framework in Tanzania, they would be designated as "reporting persons" and would be subject to:

**Customer Due Diligence (CDD) and Know Your Customer (KYC):** Identifying and verifying the identity of customers and beneficial owners.

**Ongoing Transaction Monitoring:** Scrutinizing transactions for suspicious activity.

**Sanctions Screening:** Screening customers and transactions against national and international sanctions lists.

**Suspicious Transaction Reporting (STR):** Reporting any suspicious activities or transactions to the FIU.

**Record-Keeping:** Maintaining records for a prescribed period.

**The Anti-Money Laundering Act, 2006 (and amendments):** Available through Tanzania's Parliament website or legal databases. (Example via National Assembly: http://www.parliament.go.tz/polis/uploads/bills/1474278458-Bill%20No.3%20of%202019%20The%20Anti-Money%20Laundering%20(Amendment)%20Act,%202019.pdf%20Act,%202019.pdf) - Note: always check for the latest consolidated version)

**The Prevention of Terrorism Act, 2002 (and amendments):** (Similarly, via Parliament website)

**Bank of Tanzania Website:** https://www.bot.go.tz/

**Tanzania Financial Intelligence Unit (FIU) Website:** http://www.fiu.go.tz/

There is **no specific "crypto custodian license"** currently established in Tanzania. Any entity wishing to offer such services would operate in a largely unregulated space, though they might fall under general financial service provider rules if their activities are deemed to align with existing licensed financial services.

Future frameworks are expected to address licensing, potentially under the purview of the Bank of Tanzania (BOT) or the Capital Markets and Securities Authority (CMSA).

**Segregation of Client Assets Rules:**

There are **no specific rules** mandating the segregation of client digital assets from the custodian's proprietary assets.

However, general principles of good financial governance and anti-money laundering (AML) practices, which are typically found in existing financial sector legislation, would strongly imply or require such segregation if an entity were to operate.

There are **no specific insurance or bonding requirements** for crypto custodians.

This is a common feature in more developed crypto regulatory regimes, designed to protect client assets in case of breaches, hacks, or insolvency. Such requirements are likely to be considered in any future framework.

There are **no specific mandates** requiring the use of cold storage (offline storage) for client digital assets.

Best practices in crypto security widely recommend cold storage for a significant portion of client assets, but this is not a regulatory requirement in Tanzania at this time.

There is **no specific legal definition** for a "qualified crypto custodian" in Tanzanian law.

In jurisdictions with developed crypto regulations, a qualified custodian often refers to a regulated financial institution (like a bank or trust company) that meets specific capital, security, and operational standards.

**Bank of Tanzania (BOT):** The central bank responsible for monetary policy and financial sector oversight, including payment systems. They are currently leading the efforts to develop a regulatory framework for digital assets.

**Capital Markets and Securities Authority (CMSA):** If digital assets are classified as securities, the CMSA would likely have jurisdiction over certain aspects, including custody for such assets.

**Financial Intelligence Unit (FIU):** Oversees Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) compliance. Any future crypto entity, including custodians, would be subject to existing AML/CFT laws.

**Bank of Tanzania Official Website:** This is the primary source for any official announcements or frameworks. You would monitor their "Publications" or "News" sections for updates.

**News Reports on Presidential Directive and BOT's Response (for contextual understanding):** While not direct regulatory documents, these confirm the government's intent.

Example (news report referencing the President's directive and BOT's response):

*You would typically search news archives from late 2021/early 2022 for reports like "Tanzania central bank studying cryptocurrencies after president's call".* A specific unchanging URL for a news report isn't a regulatory reference, but it confirms the official statements.

**The Anti-Money Laundering Act, 2006 (and its subsequent amendments):** Any future crypto framework will almost certainly integrate and require compliance with existing AML/CFT laws.

Finding the most up-to-date version of Tanzanian Acts online can sometimes be challenging, but they are typically found on the Attorney General's Chambers website or legal databases.

**Legal Basis:** As a UN member state, Tanzania is legally bound to implement sanctions imposed by the UN Security Council. These sanctions are primarily aimed at combating terrorism, proliferation of weapons of mass destruction, and addressing specific threats to international peace and security.

**Obligations:** Financial institutions (and by extension, any entity deemed a "reporting person" under Tanzanian AML law, which could include VASPs if they were formally regulated) must:

**Screen against the UN Consolidated List:** Check customers, beneficial owners, and transaction parties against the UN Security Council Consolidated List, which identifies individuals and entities subject to asset freezes, travel bans, and arms embargoes.

**Freeze Assets:** Immediately freeze funds or other economic resources of designated individuals and entities.

**Prohibit Transactions:** Refrain from making funds or economic resources available, directly or indirectly, to or for the benefit of designated individuals and entities.

**Report:** Report any hits or frozen assets to the relevant authorities (e.g., Financial Intelligence Unit - FIU).

**Relevance to Crypto:** If crypto assets are recognized as "funds" or "economic resources" under Tanzanian law, these obligations would directly apply to VASPs. Even if not explicitly recognized, best practice dictates treating them as such to avoid facilitating sanctioned activity.

**UN Security Council Sanctions Committees:** https://www.un.org/securitycouncil/sanctions/committees

**Legal Basis:** The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) administers and enforces U.S. sanctions programs. While U.S. law, OFAC sanctions have significant extraterritorial reach.

**Why it Applies to Tanzania-based Entities:**

**US Dollar Nexus:** Transactions involving the U.S. dollar, even if initiated and completed outside the U.S., often clear through the U.S. financial system, making them subject to OFAC jurisdiction.

**U.S. Persons Involvement:** Any transaction involving a U.S. person (citizen, resident, entity, or branch abroad) or U.S.-origin goods/services (including software or cloud services) makes it subject to OFAC.

**Secondary Sanctions:** Certain OFAC programs include "secondary sanctions" which target non-U.S. persons for engaging in specific activities with sanctioned countries or entities, even if no direct U.S. nexus exists.

**Obligations:** VASPs dealing with any U.S. nexus (customers, funds, technology) must:

**Screen against OFAC Sanctions Lists:** Primarily the Specially Designated Nationals and Blocked Persons (SDN) List, but also other lists like the Non-SDN Palestinian Legislative Council List, Sectoral Sanctions Identifications (SSI) List, etc.

**Block/Reject Transactions:** Block property and interests in property of SDNs and reject prohibited transactions involving sanctioned jurisdictions or entities.

**Report:** Report blocked property and rejected transactions to OFAC.

**Relevance to Crypto:** OFAC has explicitly stated that its sanctions apply to virtual currency transactions and has designated cryptocurrency addresses associated with sanctioned entities.

**OFAC Guidance on Virtual Currency:** https://home.treasury.gov/system/files/126/virtual_currency_guidance_final.pdf

**Legal Basis:** The European Union imposes sanctions (restrictive measures) based on common foreign and security policy decisions.

**EU Persons/Entities:** Transactions involving EU citizens, residents, or entities (including subsidiaries or branches of EU companies).

**EU Financial System Nexus:** Transactions routed through the EU financial system.

**EU-Origin Technology:** Use of EU-origin technology or services.

**Obligations:** VASPs with an EU nexus must:

**Screen against EU Sanctions Lists:** Check against the EU Consolidated Financial Sanctions List.

**Freeze Assets:** Freeze funds and economic resources of designated individuals and entities.

**Report:** Report any hits to relevant EU member state authorities.

**Relevance to Crypto:** The EU's 6th AML Directive and upcoming MiCA (Markets in Crypto-Assets) regulation explicitly bring VASPs under AML/CFT and sanctions compliance obligations.

**EU Consolidated List of Persons, Groups and Entities Subject to EU Financial Sanctions:** While not a single direct public list like OFAC's SDN, the EU Sanctions Map provides access to relevant regulations.

**Regulator Name:** Bank of Tanzania (BoT)

**Entity Targeted:** The general public, financial institutions, and any individuals or entities attempting to deal in, facilitate, or operate businesses involving cryptocurrencies.

**Violation Type:** Dealing in, facilitating, or promoting instruments not recognized as legal tender; operating unauthorized financial services.

**Penalty Amount:** Not a specific fine amount applied in a single action, but the **outcome** implies potential prosecution under existing financial laws for unauthorized activities.

**Date:** Ongoing, but significant reaffirmations and warnings were issued from mid-2021 onwards.

**Outcome:** Cryptocurrencies are not recognized as legal tender in Tanzania. Financial institutions are prohibited from facilitating crypto transactions. This creates a high-risk environment for anyone operating a crypto business, as they would be operating outside the legal framework and subject to potential criminal charges rather than regulatory fines.

**Context:** Following comments by President Samia Suluhu Hassan in June 2021 urging the central bank to explore cryptocurrencies, the BoT clarified its long-standing position that crypto is not legal tender and warned the public about the risks. While they mentioned studying the technology, the ban on financial institutions dealing with crypto remained. This effectively served as a strong "enforcement" measure preventing the emergence of licensed crypto businesses.

**Bank of Tanzania's Stance (via news report):**

*Bloomberg Africa:* Tanzania’s Central Bank Maintains Crypto Ban While Studying Its Use (Dated June 18, 2021)

*Reuters (via The Citizen):* Tanzania to look into cryptocurrencies after President's call (Dated June 16, 2021, detailing the President's comments and the BoT's subsequent clarification)

**Entity Targeted:** Any entity attempting to establish a cryptocurrency exchange, brokerage, or related service within Tanzania.

**Violation Type:** Operating an unauthorized financial institution; providing financial services without a license.

**Penalty Amount:** Not applicable as there are no known licensed entities to fine. The consequence would be prevention of operation or legal action.

**Outcome:** Due to the regulatory stance, no formal licenses have been issued for cryptocurrency businesses. This means any entity attempting to operate such a business would be considered illegal from the outset. This "enforcement" is preventative and structural, rather than reactive with specific penalties.

**General overview of African crypto regulation, noting Tanzania's restrictive stance:**

*PwC Global Crypto Regulation Report (2022/2023 versions would reflect this):* While not a single URL for an enforcement action, these reports consistently classify Tanzania as having a highly restrictive/prohibitive crypto regulatory environment, underscoring the lack of licensed operations. (A direct BoT statement on licensing would be ideal, but is unlikely to exist as they don't license them).

*The Africa Report (discussion of crypto in Tanzania):* Is Tanzania preparing for a shift on crypto regulations? (Dated June 16, 2021 - again, highlighting the *discussions* but not a change in formal *licensing* or a specific enforcement against an entity).