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Tanzania's National Bank of Commerce fined over failing to establish data center

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Tanzania's National Bank of Commerce fined over failing to establish data center

The Bank of Tanzania fined local lender National Bank of Commerce Ltd. 1 billion Tanzanian shillings for failing to set up a primary or secondary data center in the country despite confirming in writing that it had, Reuters reported, citing a statement from the central bank.

In 2014, the central bank issued a directive mandating lenders to establish data centers within Tanzania instead of on servers abroad and warned that substantial fines would be imposed in case of noncompliance. The new rules were introduced to mitigate the disruption to banks' operations in case they are cut off from accessing data centers of their parent companies that are based outside abroad, the report said.

The central bank said, in a statement sent to Reuters, that since 2014 it has issued three circulars to banks and financial institutions related to the requirement but most have yet to comply.

In the week of Aug. 19, the central bank declared that all banks must set up a data center in Tanzania within three months or risk facing an increased penalty of 5 billion shillings, according to the report.

The central bank noted that it will impose an additional charge of 10% of the original fine on National Bank of Commerce, a unit of South Africa's Absa Group Ltd., for every month in which it does not establish the data center, the news wire reported.

In July, the Bank of Tanzania fined Diamond Trust Bank Tanzania Ltd. 1 billion shillings for violating rules on data and service availability.

As of Aug. 29, US$1 was equivalent to 2,294.50 Tanzanian shillings.