Financial Crime World

Ethiopia’s Money Laundering Scene: Exposing Typologies and Techniques

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

Introduction

In the shadows of Ethiopia’s thriving economy, the illegal pursuit of money continues to pose a significant challenge. Money laundering, in particular, is a growing concern. In this article, Messay Asgedom Gobena from Addis Ababa University provides insights into the most common money laundering typologies and techniques in Ethiopia.

Methodology

The study drew on primary data from the Ethiopian Financial Intelligence Center, Ethiopian Customs Commission, selected commercial banks, and law enforcement agencies. Secondary data from government reports, media press, statutes, and other online and offline sources were also used.

Money Laundering through Financial Institutions

  • Opening multiple accounts in different banks under fictitious names
  • Transferring funds from one account to another to disguise the illicit origin of the funds

Trade-based Money Laundering

  • Use of complex international trade transactions
  • Participation of various middlemen
  • Obscures the flow of money and its illicit origins

Cash-based Money Laundering

  • Funneling funds through informal financial channels
  • Difficult to trace due to its sheer volume and the use of unregulated channels
  • Law enforcement and financial intelligence units are increasing efforts to monitor and mitigate this type of illicit activity

Other Money Laundering Techniques

  • Money laundering through illegal hawalas
  • Anonymous beneficiaries
  • Shell companies

Emerging Financial Technologies and Virtual Currencies

  • Criminals have increasingly turned to emerging financial technologies and virtual currencies, such as cryptocurrencies, to further obscure the trail of their ill-gotten gains

Challenges for Policymakers and Law Enforcement Agencies

  • Ethiopia’s unique political economy presents specific challenges to policymakers and law enforcement agencies

Conclusion

The typologies are not only intertwined but also operate on a transnational scale. This research contributes to the understanding of money laundering typologies specifically in the context of cash-intensive economies, making it a valuable addition to the discourse on money laundering in Ethiopia.