ANALYSIS OF THE ENFORCEMENT OF MONEY LAUNDERING LAWS IN ETHIOPIA: SPECIAL EMPHASIS TO THE BANKING SECTOR

Abstract

Money laundering is a crime that committed to hide the origin of illegally obtained money. Such crime can be committed by political leaders, civil servants in government and business elites in the public sector of a country. As any crime affects the socio-economic well being of a nation; Money laundering has a major impact on a country’s economy because it affects economic growth by weakening individual banks, and threatening country’s overall financial sector reputation. So combating money laundering and terrorist financing is, therefore, a key element in promoting a strong and sound financial sector. Ethiopia recently enacted a new law on money laundering and financing of terrorism, which is the second law that relatively fulfils internationally accepted standards of AML. But still there is problem in enforcing this law uniformly in all public and private banks in the Country. Especially the reporting and analysis of suspicious transactions is still a largely ineffective process. Although the formal banking sector made progress in tracking financial transactions connected with money laundering or terrorist financing, the informal financial services industry and the large numbers of underground banks make effective AML/ CTF a difficult endeavor in Ethiopia. Recommendation is given forfurther efforts to be made by the government. The present study addresses the issue of the enforcement of Ethiopian Anti money laundering laws especially in the banking sector. It is intended to support competent authorities by showing the major problems seen in implementing the laws and to suggest ways of enhancing the effectiveness of the law in achieving its objective with specific reference to the banking sector.