1. Introduction
2. General Requirements
3. Eligibility Criteria
4. Required Documentation
5. Conclusion.

Introduction:

Tanzania’s financial landscape is evolving rapidly, driven by technological advancements and a growing demand for digital payment solutions. As a result, obtaining the appropriate licenses is crucial for businesses looking to operate in this space. This article outlines the requirements and processes for securing a Payment System Provider (PSP) license and an Application Services License (ASL) from the relevant authorities.

Payment System Provider License (PSP)

General Requirements:

To apply for a PSP license, businesses must complete a series of foundational requirements that can vary based on specific circumstances. Initially, applicants must submit a completed application form that details the nature of the payment services they intend to provide. This form serves as the starting point for the regulatory review process.

Additionally, a comprehensive business plan is essential. This document should outline the company’s strategic approach to delivering payment services, including target markets, competitive analysis, and anticipated challenges. The plan should also illustrate how the proposed services align with industry trends and customer needs.

Another critical component is the submission of the organizational structure, which should clearly outline the hierarchy of the business and detail key personnel involved in operations. This transparency helps regulators assess the management capabilities of the company.

Compliance is paramount in the financial sector, and businesses must provide robust compliance policies that address anti-money laundering (AML) and know-your-customer (KYC) regulations. These policies must be thorough and reflect a commitment to preventing illicit activities. For those who need assistance, professional services can help prepare these documents to ensure compliance with the law.

Demonstrating financial stability is also crucial. Applicants must submit recent financial statements that provide evidence of their fiscal health and ability to sustain operations in a competitive market. This information is vital for regulators to gauge the viability of the business.

Lastly, businesses must outline their technology infrastructure and security measures. This includes details about the systems and technologies used to facilitate payment services, ensuring they meet industry standards for security and efficiency. Additionally, a comprehensive set of risk management policies must be included, demonstrating the company’s preparedness to handle various operational risks.

Eligibility Criteria:

To qualify for a PSP license, applicants must meet specific eligibility criteria. First and foremost, the business must be incorporated under Tanzanian law, either as a bank/financial institution or a non-bank/non-financial institution. This legal foundation is essential for establishing credibility and accountability.

Moreover, the payment system should aim to facilitate various activities, including clearing and settling payment instructions between financial and non-financial institutions. The scope of services should encompass electronic fund transfers, the provision of technological services to support payment systems, and initiatives to enhance access for the unbanked and under-banked populations.

Required Documentation:

Submitting the required documentation is a crucial step in the application process. Applicants must provide the Memorandum and Articles of Association that outline the company’s operational framework. A certified copy of the Certificate of Incorporation is also necessary to confirm the business’s legal status.

Further, a letter from the Registrar of Companies is required, detailing information about shareholders and directors, including their nationalities and shareholding structures. This transparency is vital for regulatory oversight.

Additionally, applicants must secure reference letters from two non-related individuals who can vouch for the character and integrity of significant shareholders and senior managers. This step is intended to ensure that those in key positions uphold high ethical standards.

The application also necessitates the completion of a Fit and Proper Person Form B, which assesses the suitability of shareholders, directors, and senior managers. Applicants must also provide documentation regarding the source of funds, supported by relevant documents that demonstrate financial backing for the proposed business.

If applicable, foreign companies must include certified copies of their incorporation documents, share certificates, and details about their shareholders and directors. This information is crucial for ensuring that all entities involved are compliant with Tanzanian regulations.

Additional requirements include a certified copy of the tax identification number for new companies and a tax clearance certificate for those already operating. Companies must also present a certified copy of valid licenses from the Tanzania Communications Regulatory Authority (TCRA) if they are engaging in telecommunications-related activities. Lastly, applicants need to provide proof of payment for a non-refundable application fee, along with comprehensive documentation of policies for detecting and reporting incidents of money laundering. Governance arrangements should outline internal controls, risk management practices, and operational strategies, ensuring that the business adheres to sound financial principles.

Conclusion:

Navigating the licensing landscape in Tanzania requires careful preparation and a thorough understanding of the regulatory requirements. Both the PSP and ASL licenses serve as vital gateways for businesses aiming to leverage digital payments and application services. By meeting the outlined criteria and providing comprehensive documentation, companies can position themselves for success in Tanzania’s dynamic financial environment. For those seeking assistance, professional services are available to guide you through the complexities of the application process.

Disclaimer: This article is authored by Margreth Somme, from Rive & Co, a new and innovating law firm as a result of the partnership between ABC Attorneys, Stallion Attorneys and Sepia Attorneys, built on the foundation of trust, credibility, and novelty, offering expert legal solutions. This Article is for informational purposes only and should not be construed as legal advice. It is recommended to consult with a qualified legal professional for advice specific to your situation.