Bank face hefty fines over data compliance

THE central bank has given banks and financial institutions three months to establish data centres saying it will impose hefty fines on lenders that fail to comply.

The Deputy Governor for financial stability, Bernard Kibesse, said in a circular issued on Friday, the Central Bank said it would impose 5bn/-fine for lenders that have not set up an in-coun try data centre.

“The bank of Tanzania has noted with serious concern that most of the banks and financial institutions have not provided a true position on compliance with the requirements to put in place a primary or secondary data centre in Tanzania,” said the Deputy Governor.

“Any bank or financial institution, which will be found not to have complied with the above requirements, shall be liable to a penalty of 5bn/-,” according to the circular.

The central bank will conduct inspections on the status of lenders on the new data centre rules seven days after the issuance of the circular, it read.

The central bank circular read that every bank or financial institution must establish a data centre within three months from the date of the circular.

Any institution found not compliant will be fined 500m/-per month until it complies, it read. The central said it had issued three previous circulars to banks and financial institutions since 2014 on the requirement for data centres to be located in Tanzania instead of on servers abroad, but some lenders were yet to comply.

The central bank said last month it had fined Diamond Trust Bank Tanzania Limited 1bn/-for breaching regulatory rules on data and service availability.

Tanzania has tightened regulatory oversight over commercial banks and other financial institutions over the past few years. The central bank has revoked the licenses of at least nine banks since 2017, saying the move was aimed at safeguarding the stability of the sector.

The closure of the banks comes after President John Magufuli ordered the central bank to take action against failing financial institutions.

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Author: By DAILY NEWS Reporter

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