Ethiopia’s Shadow Economy: Unraveling the Complex Web of Money Laundering Typologies

Author: Messay Asgedom Gobena, Department of Peace and Security Studies, Institute for Peace and Security Studies, Addis Ababa University, Addis Ababa, Ethiopia

Introduction

In the bustling streets of Addis Ababa, Ethiopia’s capital city, a hidden financial crime network thrives. A new study led by respected academic Messay Asgedom Gobena sheds light on the intricate money laundering typologies and techniques prevalent in this cash-intensive economy.

Purpose

The study titled, “Money laundering in Ethiopia: An analysis of typologies and techniques,” aims to identify the unique ways that money is being laundered within Ethiopia’s borders.

Design/Methodology

A comprehensive analysis was conducted using both primary and secondary sources, including:

1. Interviews with key stakeholders at the Ethiopian Financial Intelligence Center, Ethiopian Customs Commission, select commercial banks, and law enforcement agencies
2. Government reports, media press, statutes, and online and offline resources

Findings

The study reveals that various money laundering techniques are utilized in Ethiopia. Some of the most common are:

1. Money laundering through financial institutions
   • Criminals exploit banking system loopholes for deposit, withdrawal, or transfer of funds involved in illicit activities
2. Trade-based money laundering
   • Criminals manipulate international trade to launder money through invoice manipulation, misrepresentation of goods, or under/over invoicing
3. Cash-based money laundering
   • Large cash transactions are difficult to trace due to the lack of proper records and reporting
4. Illegal hawala
   • An informal system for transferring value, without involving formal financial institutions, is a popular choice for money launderers
5. Shell companies
   • Fake businesses, often listed offshore, are used to route money into legitimate accounts
6. Anonymous beneficiaries
   • Criminals use others’ identities to make transactions

The study further notes that financial technologies and virtual currencies have recently emerged as new tools used by criminals in Ethiopia.

Originality/Value

This study adds valuable insight to the existing body of knowledge on money laundering typologies and techniques, particularly in the context of cash-intensive economies like Ethiopia.

Keywords

• Ethiopia
• Money laundering
• Typologies
• Techniques

Citation

Gobena, M.A. (2023). Money laundering in Ethiopia: An analysis of typologies and techniques. Journal of Money Laundering Control, 26(4), 696-708. https://doi.org/10.1108/JMLC-03-2022-0053

Publisher

Emerald Publishing Limited

Copyright

© 2023, Emerald Publishing Limited

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