A joint World Bank and ESAAMLG report that provides a summary of the anti-money laundering (AML) / counter-terrorist financing (CFT) measures in place in Ethiopia as at the date of the on-site visit (7-17 April 2014).

1. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015 1
Anti-money laundering and counter-
terrorist financing (AML/CTF)
measures in Ethiopia
Mutual Evaluation
Key findings, ratings and priority actions
May 2015
www.fatf-gafi.org/topics/mutualevaluations/documents/mer-ethiopia-2015.html

2. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015 2
This assessment was
conducted by the
WORLD BANK GROUP
approved by the
ESAAMLG plenary

3. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
Key findings
 Ethiopia’s AML/CFT efforts are recent, but the legal
AML/CFT framework is generally solid.
 It is highly unlikely that Ethiopia’s financial sector would
be widely used to launder funds, taking into account the
lack of integration of the financial sector, regionally and
globally. However, Ethiopia is located in a highly volatile
region with active terrorist groups.
 Ethiopia needs to complete its national money
laundering / terrorist financing risk assessment and
adopt a comprehensive action plan based on that
assessment
3

4. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
Key findings
 Ethiopia should address the illegal provision of money
value transfer services through regulatory enforcement .
 Additional training on more effective uses of the money
laundering offence among relevant agencies and the
private sector may lead to greater detection and
investigation of proceeds from criminal conduct
4

5. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
Key findings
 A very high percentage of Ethiopia’s population is without
access to financial services, resulting in high volumes of
cash transactions taking place which are unrecorded and
untraceable. Government efforts to promote financial
inclusion need to be closely coordinated with the ML/TF
designated agencies to ensure that ML/TF risks associated
with financial exclusion are properly managed.
5

6. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
Key findings
 Possibly due to the recent introduction of AML/CFT
measures: many relevant officials do not yet have the
necessary knowledge and expertise. More training and
capacity building is required.
 The Financial Intelligence Centre is understaffed and has
taken on tasks beyond the core financial intelligence unit
tasks, specifically the supervision of reporting entities
AML/CFT obligations.
6

7. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
Ratings – Effectiveness (1/3)
7
Immediate outcome of an effective system to combat money
laundering (ML) and terrorist financing (TF)
Extent to
which
Ethiopia has
achieved this
objective
1. ML and TF risks are understood and, where appropriate,
actions co-ordinated domestically to combat ML and TF
Low
2. International co-operation delivers appropriate information,
financial intelligence, and evidence, and facilitates action
against criminals and their assets
Moderate
3. Supervisors appropriately supervise, monitor and regulate
financial institutions and designated non-financial
businesses and professions (DNFBPs) for compliance with
AML/CFT requirements commensurate with their risks.
Low
4. Financial institutions and DNFBPs adequately apply AML/CFT
preventive measures commensurate with their risks, and
report suspicious transactions.
Low

8. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
Ratings – Effectiveness (2/3)
8
Immediate outcome of an effective system to combat money
laundering (ML) and terrorist financing (TF)
Extent to
which
Ethiopia has
achieved this
objective
5. Legal persons and arrangements are prevented from misuse
for money laundering or terrorist financing, and information
on their beneficial ownership is available to competent
authorities without impediments
Moderate
6. Financial intelligence and all other relevant information are
appropriately used by competent authorities for money
laundering and terrorist financing investigations.
Low
7. Money laundering offences and activities are investigated
and offenders are prosecuted and subject to effective,
proportionate and dissuasive sanctions
Low
8. Proceeds and instrumentalities of crime are confiscated. Low

9. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
Ratings – Effectiveness (3/3)
9
Immediate outcome of an effective system to combat money
laundering (ML) and terrorist financing (TF)
Extent to
which
Ethiopia has
achieved this
objective
9. Terrorist financing offences and activities are investigated
and persons who finance terrorism are prosecuted and
subject to effective, proportionate and dissuasive sanctions.
Low
10. Terrorists, terrorist organisations and terrorist financiers are
prevented from raising, moving and using funds, and from
abusing the non-profit sector.
Low
11. Persons and entities involved in the proliferation of weapons
of mass destruction are prevented from raising, moving and
using funds, consistent with the relevant United Nations
Security Council Resolutions.
Low

10. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
00
2
9
High
Substantial
Moderate
Low
Ratings – Effectiveness
10

11. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
Ratings – technical compliance (1/5)
10-Jun-15
11
AML/CFT POLICIES AND COORDINATION
1. Assessing risks & applying a risk-based approach Non-compliant
2. National cooperation and coordination Partially compliant
MONEY LAUNDERING AND CONFISCATION
3. Money laundering offence Largely compliant
4. Confiscation and provisional measures Largely compliant
TERRORIST FINANCING AND FINANCING OF PROLIFERATION
5. Terrorist financing offence Largely compliant
6. Targeted financial sanctions related to terrorism & terrorist financing Non-compliant
7. Targeted financial sanctions related to proliferation Non-compliant
8. Non-profit organisations Partially compliant

12. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
Ratings – technical compliance (2/5)
10-Jun-15
12
PREVENTIVE MEASURES
9. Financial institution secrecy laws Compliant
Customer due diligence and record keeping
10. Customer due diligence Largely compliant
11. Record keeping Compliant
Additional measures for specific customers and activities
12. Politically exposed persons Compliant
13. Correspondent banking Compliant
14. Money or value transfer services Partially compliant
15. New technologies Largely compliant
16. Wire transfers Compliant

13. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
Ratings – technical compliance (3/5)
10-Jun-15
13
PREVENTIVE MEASURES (continued)
Reliance, Controls and Financial Groups
17. Reliance on third parties Compliant
18. Internal controls and foreign branches and subsidiaries Largely compliant
19. Higher-risk countries Partially compliant
Reporting of suspicious transactions
20. Reporting of suspicious transactions Compliant
21. Tipping-off and confidentiality Largely compliant
Designated non-financial Businesses and Professions (DNFBPs)
22. DNFBPs: Customer due diligence Largely compliant
23. DNFBPs: Other measures Largely compliant

14. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
10-Jun-15
14
TRANSPARENCY AND BENEFICIAL OWNERSHIP OF LEGAL PERSONS AND ARRANGEMENTS
24. Transparency and beneficial ownership of legal persons Partially compliant
25. Transparency and beneficial ownership of legal arrangements Not applicable
POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES AND OTHER INSTITUTIONAL
MEASURES
Regulation and Supervision
26. Regulation and supervision of financial institutions Largely compliant
27. Powers of supervisors Compliant
28. Regulation and supervision of DNFBPs Partially compliant
Operational and Law Enforcement
29. Financial intelligence units Largely compliant
30. Responsibilities of law enforcement and investigative authorities Largely compliant
31. Powers of law enforcement and investigative authorities Largely compliant
32. Cash couriers Partially compliant
Ratings – technical compliance (4/5)

15. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
10-Jun-15
15
TRANSPARENCY AND BENEFICIAL OWNERSHIP OF LEGAL PERSONS AND ARRANGEMENTS
(continued)
General Requirements
33. Statistics Partially compliant
34. Guidance and feedback Partially compliant
Sanctions
35. Sanctions Largely compliant
INTERNATIONAL COOPERATION
36. International instruments Partially compliant
37. Mutual legal assistance Largely compliant
38. Mutual legal assistance: freezing and confiscation Largely compliant
39. Extradition Largely compliant
40. Other forms of international cooperation Non-compliant
Ratings – technical compliance (5/5)

16. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
8
17
10
4
1
Compliant
Largely compliant
Partially compliant
Non-compliant
Not applicable
Ratings – technical compliance
16

17. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
Priority Actions for Ethiopia to
strengthen its AML/CFT System
 Completion of the National Risk Assessment
process
 Broadening and reorientation of:
– suspicious transaction reporting,
– analysis and money laundering investigations,
– prosecutions and asset freezing and confiscation
towards the most significant sources of illicit
proceeds and
 identification of the most common money
laundering methods/techniques
17

18. Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
Priority Actions for Ethiopia to
strengthen its AML/CFT System
 Provide further training and awareness raising
for government officials and reporting entities
 Expand financial services to the unbanked and
those without access to financial services
 Provide more resources / staff to the Financial
Intelligence Centre
18