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

By: Mesay Asgedom Gobena, [Department of Peace and Security Studies], Institute for Peace and Security Studies, Addis Ababa University, Ethiopia

Introduction

Ethiopia, one of Africa’s most populous and fastest-growing economies, has become an unexpected hub for money laundering. In this article, we delve into the intricate world of money laundering in Ethiopia, exploring the typologies and techniques criminals use to disguise the proceeds of their illicit activities.

Purpose

Understanding the methods of money laundering is crucial for effectively combating this global problem. The primary objective of this investigation is to identify and outline the most common money laundering techniques and typologies prevalent in Ethiopia.

Methods

To accurately depict the money laundering landscape in Ethiopia, we gathered information from various sources:

Interviews with representatives from the Ethiopian Financial Intelligence Center, Ethiopian Customs Commission, leading commercial banks, and law enforcement agencies.
Government reports, media press, statutes, and online and offline sources.

Findings

Our analysis of money laundering in Ethiopia uncovers various techniques:

Money laundering through financial institutions: Criminals exploit bank accounts, financial instruments, and other financial products to legitimize their ill-gotten gains.
Trade-based money laundering: This involves the manipulation of international trade transactions to disguise money laundering activities.
Cash-based money laundering: Involves the conversion of cash into other assets or cash-equivalents, making it difficult to trace.
The use of illegal hawala: This informal value transfer system is commonly used to move funds across borders without leaving a trace.
Shell companies and anonymous beneficiaries: Criminals create complex structures of companies and individuals to hide their true identities and ownership.

Fig. 1: Money Laundering Techniques in Ethiopia

Figure 1: Money Laundering Techniques in Ethiopia

There has been growing concern that cybercrime and digital currencies are increasingly being exploited for money laundering purposes. The interplay between these typologies creates a complex web, making it challenging to distinguish one from another. Money laundering operations in Ethiopia are not isolated incidents but an intricate web that reaches beyond the country’s borders, capitalizing on the unique political economy of the region.

Originality

This research, focusing specifically on money laundering typologies and techniques in cash-intensive economies like Ethiopia, offers a significant contribution to the existing body of knowledge.

Keywords

Ethiopia
Money laundering
Typologies
Techniques