Ethiopian Banks Face Surging Fraud Threats: NBE Warns of Operational Risks Amidst Rising Cases of Financial Fraud

Addis Ababa, Ethiopia - The National Bank of Ethiopia (NBE) has issued a stern warning to Ethiopian banks, citing a marked increase in fraudulent activities and the significant operational risks they entail. According to the recent Financial Stability Report (FSR), losses amounting to almost 1 billion Birr have been incurred by 20 Ethiopian banks, primarily due to counterfeit money and checks, robberies, false guarantees, and ATM card theft.

Fraudulent Activities in Ethiopian Banks

Some major banks suffered a combined loss of 20 million Birr from robberies alone, with incidents occurring through June 2023. The financial sector in Ethiopia has been making strides to modernize their services, with digital micro-credits and partnerships with third parties gaining popularity. However, the NBE has urged caution against the potential increase in fraud accompanying such advances.

• Counterfeit Money and Checks: The FSR underlines incidents of fraud involving falsified currency and checks, leading to substantial losses for various banks.
• Robberies: The report indicates that several banks have been subject to robberies, resulting in considerable damages and losses.
• False Guarantees: Some institutions have experienced significant financial harm due to fake loan guarantees.
• ATM Card Theft: The prevalence of ATM card theft has also contributed to the escalating losses in the banking sector.

High-Profile Fraud Case

In a high-profile case, a criminal gang led by Belay Mekonnen, the Deputy Manager of the Ethiopian Orthodox Church (EOTC), attempted to defraud the African Union out of over $6 million through a Commercial Bank of Ethiopia branch in Addis Ababa. An official complaint was lodged with the Ethiopian Federal Police Commission by the African Union authorities.

Enhancing Fraud Prevention Measures

As Ethiopian banks continue their digital transformation, the NBE advises institutions to bolster their fraud prevention measures to mitigate potential losses and safeguard the integrity of the Ethiopian financial system.

Ethiopian Politics: Merger Talks Amidst Uncertainty

Meanwhile, Ethiopia’s ruling Prosperity Party and the Tigray People’s Liberation Front (TPLF) are reportedly holding exploratory talks for a political merger. If successful, the merger could reshape Ethiopian politics and bring significant changes to the political landscape.

As events continue to unfold in these critical areas, Ethiopian citizens, banks, and stakeholders remain attentive, with hope for a brighter and more secure future.