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FAFT AML Deficient


Higher Risk Areas


Non - Compliance with FATF 40 + 9 Recommendations

Not on EU White list equivalent jurisdictions

Corruption Index (Transparency International & W.G.I.)

World Governance Indicators (Average Score)

Failed States Index (Political Issues)(Average Score)

Medium Risk

Non - Compliance with FATF 40 + 9 Recommendations





FATF Status

Ethiopia is on the FATF List of Countries that have been identified as having strategic AML deficiencies


Latest FATF Statement  -  23 June 2017

In February 2017, Ethiopia made a high-level political commitment to work with the FATF and ESAAMLG to strengthen its effectiveness and address any related technical deficiencies. Ethiopia has begun working to implement its action plan, which includes: (1) implementing the results of its national risk assessment; (2) fully integrating designated non-financial businesses and professions into its AML/CFT regime; (3) ensuring that the proceeds and instrumentalities of crime are confiscated; (4) consistently implementing terrorism-related targeted financial sanctions and proportionately regulating non-profit organizations in line with a risk-based approach; and (5) establishing and implementing WMD-related targeted financial sanctions. The FATF encourages Ethiopia to continue implementing its action plan to address its AML/CFT deficiencies.


Compliance with FATF Recommendations 

Ethiopia has not yet undertaken a Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards.


Money Laundering / Terrorism Financing Risks (FATF Mutual Evaluation)

In the absence of a completed national risk assessment, the findings on ML and TF risks faced by Ethiopia are preliminary, predominantly based on interviews and not necessarily supported by data. The main sources of illicit proceeds generating activity in Ethiopia are corruption (specifically involving administration of land, procurement, tax, telecommunications and pharmaceuticals), tax fraud/evasion, human trafficking and migrant smuggling, arms trafficking and smuggling of contraband (coffee, ‘khat’ and livestock outbound; foreign exchange; textiles, electronics and pharmaceuticals inbound) and the profit made from providing illicit financial services. It is not entirely clear how these proceeds are laundered.

International organizations and counterparts in Ethiopia have noted corruption as an issue in the jurisdiction. Based on 8 surveys conducted, Ethiopia has received a rating of 33 out of 100 by the Transparency International’s Corruption Perception Index 2013 (based on a scale of 0 - 100, where 0 means that a country is perceived as highly corrupt and 100 means it is perceived as very clean) and is ranked 111 out of 177 countries. Ethiopia is ranked at 32 by the World Bank Worldwide Governance indicator, for control of corruption in 2013 (where 0 corresponds to the lowest rank and 100 corresponds to the highest rank). A report by the World Bank in 2012 on Diagnosing Corruption in Ethiopia, finds that there is an emerging pattern in sector-level corruption, with interesting variations in the levels of corruption across the sectors studied. According to the study, in Ethiopia, the risk of corruption is greater in sectors such as construction, land and mining and particularly in “new” investment sectors which include telecommunications, pharmaceuticals, etc. According to the authorities, there have been violations of public procurement rules, regulations and directives. The Business Anti-Corruption Portal2 notes that practices of corruption are increasingly in the form of private to private corruption whereby private companies yield procurement contracts to other private companies, in return for bribes. The Portal also notes that land distribution and administration has been reported as a highly vulnerable sector to corruption, involving facilitation payments and bribes being paid to keep land that is leased from the state. The Ethiopian authorities indicated that they disagree with these findings. In addition, the Ethiopian authorities provided two reports on corruption conducted by Addis Ababa University and Kilimanjaro International Corporation Limited. The latter study found that “corruption remains a problem in the country, but it is not among the topmost problems faced by the citizens. There are other, more pressing, problems that threaten their daily struggles for survival, notably inflation and unemployment. However, inflation/increasing cost of living and unemployment create an environment that is conducive to corruption. The survey also found that, while the general perception is that corruption is a serious and worsening problem, the reality is perhaps not as bad as the perception” Furthermore, the World Bank study claims that “a specific finding that seems to span a number of sectors points towards the widely held concerns that there is favouritism towards members of the ruling political party”. The World Bank study also noted that prosecutorial and judicial corruption was less of a common occurrence. Most reported cases are those of petty corruption involving payment or solicitation of bribes or other considerations to alter a decision or action, specifically bribes solicited by or offered to police to ignore a criminal offence, not to make an arrest and not to bring witnesses or suspects to court. The World Bank study notes that the Government has made important strides in dis-incentivizing corruption in the justice sector.

Ethiopia is located at the very center of a highly volatile region. Ethiopia shares long porous borders with its neighbours. Eritrea lies to the north, Somalia lies to the east, and there are regional terrorist groups (Al-Shabaab) and domestic armed opposition groups (Ogaden National Liberation Front (ONLF), Oromo Liberation Front (OLF)) operating in and around Ethiopia. Eritrea provides training facilities, and material and logistical support to OLF and ONLF and Al-Shabaab controls some areas in Somalia. “Both countries in very different ways serve as platforms for foreign armed groups that represent a grave and increasingly urgent threat to peace and security in the Horn and East Africa region.”3 In addition there are believed to be several other armed rebel groups active in Ethiopian territory. More recent incidents include the pre-detonation of bombs by two suspected Al–Shabaab operatives in October 2013, a terrorist attack on tourists in January 2012 and the killing of several people by ONLF at an Ethiopian Oil Field in April 2007.


US Department of State Money Laundering assessment (INCSR) 

Ethiopia was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR).

Key Findings from the report are as follows: -


Due primarily to its underdeveloped financial system and pervasive government controls, Ethiopia is not considered to be a regional financial center. Although Ethiopia’s location within the Horn of Africa makes it vulnerable to money laundering-related activities perpetrated by transnational criminal organizations, terrorists, and narcotics trafficking organizations, its limited integration in the global financial system, underdeveloped financial institutions, and strict currency controls make it highly unlikely such groups will use the financial sector to launder funds from abroad. Corruption, smuggling, tax fraud, and trafficking in narcotics, persons, arms, and animal products are the key proceeds-generating crimes. As the economy grows and becomes more open, Ethiopian law enforcement sources believe bank fraud, electronic/computer crime, and related money laundering activities could continue to rise. The financial services sector remains closed to foreign investment.

High tariffs encourage customs fraud and trade-based money laundering. Since strict foreign exchange controls limit the possession of foreign currency, most of the proceeds of contraband smuggling and other crimes are not laundered through the official banking system, composed of three public banks and sixteen private banks. Law enforcement sources indicate money and value transfer systems, particularly hawala, are widely used. The Ethiopian government attempts to monitor informal value transfer networks within the country and has closed a number of illegal hawala operations. The Financial Intelligence Center (FIC), Ethiopia’s financial intelligence unit, is currently conducting an assessment of the informal money transfer system.





There are no international sanctions currently in force against this country.







Rating (100-Good / 0-Bad)

Transparency International Corruption Index


World Governance Indicator – Control of Corruption





INVESTMENT CLIMATE - Executive Summary (US State Department)

Ethiopia is one of the fastest-growing economies in the world. It has registered impressive GDP growth for several years, ranging between 6% and 12%, depending on source data. The World Bank and IMF forecast continued average growth of 7% over the next three years. With a population of roughly 90 million, Ethiopia is the second most populous country in sub-Saharan Africa, after Nigeria.

The government of Ethiopia follows an integrated 5-year development plan, the Growth and Transformation Plan (GTP), which aims to achieve 11.2 – 14.9% GDP growth annually as well as achieve the Millennium Development Goals and attain middle-class income status by 2025. To achieve these goals, the government is investing heavily in large-scale social, infrastructural and energy projects.

While these developments are positive indicators for future private sector development, it translates into the flow of significant amounts of capital into public sector projects. World Bank estimates show that infrastructure spending requires approximately 19% of Ethiopia’s total GDP in fiscal year 2011 – 2012.

Competitive labor and energy costs as well as the budding consumer markets are key pulls for foreign direct investment. Current challenges to the private sector include foreign exchange shortages and limited access to finance capital, long lead-times for inputs and exports due to the current logistic infrastructure, and bureaucratic delays. Areas closed to foreign investment are banking, retail, tele-communications and transportation. Businesses interested in entering the market should focus on aligning operations to complement the overall goals of the GTP. Key growth sectors include renewable energy, construction, tourism, textile and leather products, tele-communication support services and products, and aviation support services and products.

The government of Ethiopia is currently working on World Trade Organization ascension with the goal of attaining least developed country status by 2015. It is actively pursuing improving the current investment climate through adopting more efficient bureaucratic processes in the areas of registration, logistic, and tax processes. Key energy generation and distribution projects as well as transportation infrastructure projects are scheduled for completion by the end of 2015.





6 November 2012  -  Extract from IMF Report: The Federal Democratic Republic of Ethiopia: 2012 Article IV Consultation—

" Ethiopia has yet to bring its anti-money laundering/combating the financing of terrorism (AML/CFT) regime into line with international standards. Since June 2011, Ethiopia has been listed by the Financial Action Task Force (FATF) among the jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing them. If not improved, heightened due diligence may impede access to global financial markets. The World Bank has been discussing a technical assistance program with the authorities to address remaining issues, with a plan to conduct an assessment of the AML/CFT framework in the first quarter of 2013."

Read Full Report (pdf file)