BizCLIR

For the purposes of this assessment, the two principal components of the law concerning financial crimes are money laundering and terrorism financing. Both are critical issues in development of transitioning economies, especially since the United Nations Security Council has made them priorities.

Ethiopia was aptly described as not necessarily a haven for financial crimes at the moment, but highly vulnerable. The motivation for such criminal activity exists even now; Ethiopia’s borders are highly porous, Customs officials are poorly trained and poorly paid, at least two of the countries bordering Ethiopia are at risk of becoming terrorist hotbeds, much of one of them (Somalia) recently encountered a violent transition to an Islamist government; parts of Ethiopia itself are at risk for groups sympathetic to Somalia’s Islamist revolution; and, although the banking system is not particularly vulnerable, so much of the economy is cash based that money flowing in and out illegally simply blends into the informal economy.

Ethiopia has made headway in its cooperation with international efforts to bring the legal regime in line with international standards, and is party to 7 of the 12 international conventions and protocols relating to terrorism. Two factors, however, have slowed the progress made toward meaningful law and the implementation of law concerning financial crimes: (1) the international community has been slow to recognize Ethiopia’s vulnerability, citing its “underdeveloped financial infrastructure and lack of economic development” as obstacles to crime  and (2) the Ethiopian Government has lagged recently in preparing its own infrastructure for compliance with international standards. Nonetheless, there is evidence of drugs being routed through Ethiopia as far back as 1994.  There is also evidence of recent significant domestic counterfeiting operations, in both foreign and Ethiopian currencies, as well as the smuggling into Ethiopia of large amounts of counterfeit foreign currency produced abroad.