Ethiopia Makes Progress in Combating Money Laundering and Terrorist Financing

Significant Development in Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Measures

ADDIS ABABA, ETHIOPIA - In a notable achievement, Ethiopia has made substantial progress in addressing deficiencies in its AML/CFT measures. According to a report released by the Eastern and Southern Africa Anti-Money Launderng Group (ESAAMLG), Ethiopia has taken concrete steps to improve its technical compliance with the Financial Action Task Force (FATF) Recommendations.

Key Developments

• The launch of a second national risk assessment (NRA) aimed at identifying and assessing money laundering and terrorist financing risks emerging from virtual assets activities.
• Significant progress made in addressing deficiencies identified in Ethiopia’s previous Mutual Evaluation Report (MER).
• Ethiopia has been re-rated “Largely Compliant” with Recommendation 34, previously rated “Partially Compliant”, due to efforts to strengthen its AML/CFT framework and address technical compliance issues.

Challenges Remaining

• Ethiopia still faces challenges in implementing certain requirements, particularly those related to virtual assets.
• The country has not yet developed requirements for licensing virtual asset service providers (VASPs), nor has it established mechanisms to prevent or mitigate money laundering and terrorist financing risks associated with VASPs.

Conclusion and Implications

The ESAAMLG report concludes that Ethiopia’s progress justifies a re-rating of Recommendation 34 from “Partially Compliant” to “Largely Compliant”. The country will continue to be subject to enhanced follow-up and is required to inform the ESAAMLG of its progress in improving the implementation of its AML/CFT measures.

This report is expected to have significant implications for Ethiopia’s financial sector, as it will help to strengthen investor confidence and improve international cooperation.