Financial Crime World

Ethiopia’s Financial Crimes: A Threat Assessment and Recent Progress

Title

Amidst the bustling Horn of Africa, Ethiopia, the second most populous country on the continent, has faced a myriad of challenges in the realm of financial crimes. In this article, we present an overview of the financial crime threats facing Ethiopia and recent progress made in addressing these challenges.

Executive Summary

  • Ethiopia was not listed as a Country of Primary Concern for Money Laundering (ML) and Financial Crimes (FC) by the United States.
  • Ethiopia was removed from the “Grey Lists” by the Financial Action Task Force (FATF) in 2019 and the European Union in 2020.
  • However, Ethiopia still faces significant threats from human trafficking and migrant smuggling, corruption, goods smuggling, illegal hawala, fraud, and tax evasion.

Corruption and Organized Crime

  • Ethiopia scored 37 out of 100 on Transparency International’s (TI) Corruption Perceptions Index (CPI) in 2019.
  • Ethiopia ranks 96 out of 180 with an overall corruption risk rating of 71.
  • Ethiopia’s Organized Crime Index (OC Index) revealed a “moderately low-criminality” rating of 4.58/10.
  • The most prevalent markets for criminal activity being human trafficking, human smuggling, and arms trafficking.

Modern-Day Slavery and Sanctions

  • According to the Global Slavery Index (GSI), an estimated 614,000 modern-day slaves live in Ethiopia.
  • Ethiopia is currently a “Tier 2” Priority Country under the Proliferation Security Initiative (PPI) Index.
  • The country faces a “Medium” terrorism impact as indicated by the Global Terrorism Index (GTI) score (5.345/10).

Response and Resilience

  • Despite these challenges, Ethiopia has demonstrated resilience, being ranked 6th out of 54 African countries and 1st out of 9 East African countries in the OC Index’s resilience category.
  • The country’s mutual evaluation report (MER) was completed in June 2015.
  • Ethiopia was removed from the FATF watchlist in June 2019 but is still under enhanced follow-up.

Country Ratings

  • Ethiopia is currently rated “Moderate to High” risk, 4th of 10 Eastern African Countries, and equal 20th out of 40 countries in the FCN’s Sub-Saharan Africa (SSA) Threat Assessment.
  • The country scores 41 out of 100 on the FCN Rating, with an “Improving” trend.

In Conclusion

Ethiopia continues to face substantial threats from financial crimes, including human trafficking, corruption, and terrorism financing. However, recent progress, such as being removed from various “Grey Lists,” enhancing its AML/CFT regime, and demonstrating resilience, offer room for hope in addressing these challenges. Further support and cooperation from both the international community and domestic stakeholders will be essential in ensuring Ethiopia’s financial security for the future.

About the Authors

  • John Cusack is the Editor and Publisher of Financial Crime News (FCN).
  • Nathanael Tilahun is an Assistant Professor of Law at Coventry University.
  • Eyob Getachew Serba is a Global Investigations and Compliance Consultant at Navigant Consulting.
  • Netsanet Solomon is a Senior Financial Crime Fighter at UBS.
  • Special thanks to Ursula M’Crystal for editing the Threat Assessment.