ETHIOPIA’S FINANCIAL ACTION TASK FORCE COMPLIANCE: MIXED BAG OF PROGRESS AND CHALLENGES

Introduction

Addis Ababa, Ethiopia - A recent evaluation by the international community has revealed that Ethiopia’s compliance with Financial Action Task Force (FATF) recommendations is a mixed bag of progress and challenges.

Mixed Bag of Progress and Challenges

According to the Mutual Evaluation Report 2015, Ethiopia has made significant strides in implementing some FATF recommendations. However, there are areas where the country still needs to improve its regulatory framework and enforcement mechanisms.

Areas of Improvement

• Assessing Risk and Applying a Risk-Based Approach: Ethiopia was found to be non-compliant (NC).
• National Cooperation and Coordination: The country’s national cooperation and coordination between different agencies and sectors scored poorly, with only partial compliance (PC).

Areas of Significant Progress

• Money Laundering Offences, Confiscation and Provisional Measures: Ethiopia showed significant improvement, with largely compliant (LC) ratings.
• Terrorist Financing Offence: The country has made progress in this area, also with a LC rating.
• Targeted Financial Sanctions Related to Terrorism and Terrorist Financing: Ethiopia scored well in this area, with a LC rating.
• Regulation and Supervision of Financial Institutions: The country’s regulation and supervision of financial institutions also scored well, with a LC rating.
• Transparency and Beneficial Ownership of Legal Persons and Arrangements: Ethiopia has made progress in implementing recommendations related to transparency and beneficial ownership of legal persons and arrangements, as well as the powers of supervisors.

Challenges Persist

• Correspondent Banking: The country’s correspondent banking activities were rated as partially compliant (PC).
• Customer Due Diligence for Non-Profit Organizations: Ethiopia was found to be partially compliant in this area.
• Reporting of Suspicious Transactions: The country’s reporting of suspicious transactions was also rated as partially compliant.

Challenges and Way Forward

The report highlights that Ethiopia’s progress is hindered by inadequate resources, lack of coordination between different agencies, and insufficient regulatory framework. The country needs to address these challenges to meet the FATF recommendations and effectively combat money laundering and terrorist financing.

Government Response

Ethiopia’s government has acknowledged the report’s findings and pledged to take corrective measures to address the identified gaps. The international community will be closely monitoring Ethiopia’s progress in implementing the FATF recommendations.