Ethiopia’s Money Laundering Underworld: New Techniques and Typologies Unearthed
By Messay Asgedom Gobena
Introduction
Ethiopia’s financial landscape has emerged as a fertile ground for money laundering schemes, according to a new study published in the Journal of Money Laundering Control. In this article, We present the key findings from Messay Asgedom Gobena’s research on money laundering in Ethiopia. The study, titled “Money laundering in Ethiopia: an analysis of typologies and techniques,” sheds light on the various methods criminals use to clean their ill-gotten gains.
Prevalent Money Laundering Techniques in Ethiopia
Gobena’s research employed primary data from interviews with professionals at the Ethiopian Financial Intelligence Center, Ethiopian Customs Commission, selected commercial banks, and law enforcement agencies. Secondary data was taken from government reports, media press, statutes, and other sources. The study identified the following money laundering techniques prevalent in Ethiopia:
- Money laundering using financial institutions
- Trade-based money laundering
- Cash-based money laundering
- Money laundering through illegal hawalas
- Shell companies or anonymous beneficiaries
Money laundering using financial institutions: This is the most common money laundering technique in Ethiopia. Criminals deposit large sums of money into accounts held in the names of shell companies or fictitious individuals. They then withdraw the money in smaller, legitimate transactions.
Trade-based money laundering: This technique involves the use of international trade to disguise the proceeds of illicit activities. For example, a criminal might overinvoice exports or underinvoice imports to transfer funds out of the country without raising suspicion.
Cash-based money laundering: This technique is particularly common in cash-intensive economies like Ethiopia. Criminals move large sums of cash across borders using informal channels such as hawalas.
Money laundering through illegal hawalas, shell companies, or anonymous beneficiaries: These techniques are used to obscure the source and ownership of funds. Hawalas are informal value transfer systems commonly used in Ethiopia, while shell companies and anonymous beneficiaries offer a layer of secrecy.
New Techniques and Technologies in Ethiopia’s Money Laundering Underworld
The research by Gobena reveals that criminals in Ethiopia are not averse to employing modern financial tools in their money laundering activities. They are increasingly leveraging financial technologies and virtual currencies to launder the proceeds of their illicit activities.
Financial technologies: Fintech, or financial technology, refers to technologies that enable and improve activities in finance and banking. Criminals in Ethiopia use these technologies to facilitate money laundering, such as transferring funds quickly and anonymously.
Virtual currencies: Virtual currencies, like Bitcoin, offer the possibility of near-anonymous transactions. Criminals can use these currencies to move funds across borders with minimal detection.
Conclusion
Gobena’s work is an essential contribution to the ongoing efforts to combat money laundering and terrorism financing. It offers invaluable insights into money laundering practices in cash-intensive economies and is one of the first papers to examine the issue from this perspective. This research could serve as a crucial resource for policy makers and law enforcement agencies as they work to curb financial crimes in Ethiopia and beyond.
References
Gobena, M. A. (2022). Money laundering in Ethiopia: an analysis of typologies and techniques. Journal of Money Laundering Control, 26(4), 696-708. DOI: 10.1108/JMLC-03-2022-0053. Available at Emerald Insight: https://www.emerald.com/insight/content/doi/10.1108/JMLC-03-2022-0053/full/html.