Forex traders told to comply with law

DAR ES SALAAM : A BANK of Tanzania official has called on foreign exchange traders to apply for a foreign exchange trading licenses to the Bank of Tanzania to be compliant with the law and regulations governing the trade.

Mr Omari Msuya, BoT’s Assistant Manager for Specialised Financial Institutions, said in Dar es Salaam on Wednesday that foreign exchange trading activities were strictly regulated and must be licensed but the conditions for obtaining the licences were easy to follow and convenient to support the business.

“There are no difficulties in obtaining foreign exchange trading licences. It is easy to be compliant with the conditions,” he said in a presentation to members of police force and foreign exchange traders at a seminar convened to build capacity of police officers on the law and regulations governing foreign exchange trading.

Mr Msuya said there was increase in number of traders who want to venture into foreign exchange trading and hence the BoT as regulators saw it was important to build capacity of police officers to enforce the law and regulations governing the business.

He said according to Tanzania Foreign Exchange Regulations 2022 made under section 6 (1) of the Foreign Exchange Act, no one is allowed to do foreign exchange trading without a Bank of Tanzania licence.

He said contravening the regulation on licence attracts a fine of substantial amount of money, a jail term not exceeding 14 years or both.

The Bank of Tanzania issues provisional approval for foreign exchange trading within one month of receipt of an application for a licence and upon submission of a complete set of required documents.

However, the provisional approval should not be treated as a licence for foreign exchange trading, he cautioned.

In cases of unsuccessful application, the applicant would receive guidelines for amendments to his or her request, he said.

The regulations permit any person whether a resident or non-resident to hold, sell and purchase foreign currency from a bank, financial institution or bureau de change, or to open and maintain a foreign currency account with a bank or financial institution within the country.

They however restrict travelling with an amount equivalent to more than 10,000 US dollars and further pose a declaratory obligation to anyone entering or leaving the country with foreign currency exceeding 10,000 US dollars or its equivalent.

He said according to the regulations a bureau de change shall not commence business until the business premises, security facilities, communication facilities, processing equipment, accounting systems are in place and have been inspected, reviewed and approved by the Bank of Tanzania.

A bureau de change shall commence operations with paid up capital of at least 1.0bn/- and pay annual fee of 1.0m/- for each operating branch, he said.

On the scope of operation, he said a bureau de change shall deal with spot transactions involving cash and other approved payment instruments.

It may also deal with money transfer business as sub agents of international money transfer agencies or mobile network operators or any other activity as may be approved by the Bank of Tanzania.

He said a bureau de change may conduct money transfer only through a locally licensed bank, financial institution, mobile network operators or international money transfer agents subject to conditions prescribed in the regulations.

He said a bureau de change shall not relocate its business without prior written approval of the regulator.

Mr Msuya said to ensure smooth operation, a bureau de change which intends to close its head office or any of its branches temporarily or permanently shall, within three days from the date of closure, notify the Bank in writing stating the reasons.

A bureau de change shall not carry on or sublet, lease to or authorise any other person to undertake any business or offer any other product or services in its business premises without prior approval of the Bank, he said.

The Dar es Salaam Special Zone Police Commander, Jumanne Murilo said it was important for police officers to understand law and regulations governing foreign exchange trading so that they can protect the traders and customers better.

“We are thankful to Bank of Tanzania for this opportunity to learn how foreign exchange trading is run according the law. Some people do not follow the law. They open bureau de change at home,” he said.

“There are those who conduct this business in unauthorised places. Everybody wants to venture into this business without following the law and regulations.”

The police force would continue to work with the Bank of Tanzania and other stakeholders to enforce the law and regulations governing foreign exchange trading, he said.

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