FATF Status​

Ethiopia is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement  -  18 October 2019​

The FATF welcomes Ethiopia's significant progress in improving its AML/CFT regime and notes that Ethiopia has strengthened the effectiveness of its AML/CFT regime and addressed related technical deficiencies to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in February 2017. Ethiopia is therefore no longer subject to the FATF's monitoring process under its ongoing global AML/CFT compliance process. Ethiopia will continue to work with ESAAMLG to improve further its AML/CFT regime.

Compliance with FATF Recommendations ​

The last follow-up to the Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Ethiopia was undertaken in 2022. According to that Evaluation, Ethiopia remained Compliant for 11 and Largely Compliant for 25 of the FATF 40 Recommendations. It remains Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness & Technical Compliance ratings.

Ethiopia's Federal Ethics and Anticorruption Proclamation aims to combat corruption among government officials and organizations, with the Federal Ethics and Anti-Corruption Commission overseeing ethics training and asset registration. Despite legal frameworks against corruption, including the criminalization of bribery and money laundering, enforcement remains weak, leading to widespread issues in tax collection, customs, and land administration. Transparency International's 2023 Corruption Perceptions Index rated Ethiopia at 38, reflecting a decline in perceived governance, while the government has established a national anti-corruption committee to address these challenges.

Ethiopia, the second most populous country in Africa, has a growing population exceeding 120 million, with a significant portion under 30 years old, which attracts foreign investment due to low-cost labor and expanding consumer markets. However, the economy faces challenges such as persistent inflation around 30%, a foreign exchange shortage, and political unrest, leading to a default on a $1 billion Eurobond in December 2023. Despite these issues, the IMF estimated GDP growth at 6.1% in 2023, indicating a recovery from previous years.

Ethiopia's investment climate is challenged by significant foreign exchange shortages, unclear property rights, and bureaucratic delays, which hinder the ability of companies to repatriate profits and import necessary goods. Despite these challenges, the government has made efforts to attract foreign direct investment (FDI) by implementing new investment laws and allowing offshore accounts for strategic investments. However, ongoing political instability and insecurity have further dissuaded potential investors.