Why money laundering is nurtured in Ethiopia?
| DOI | https://doi.org/10.1108/JMLC-09-2021-0090 |
| Published date | 01 November 2021 |
| Date | 01 November 2021 |
| Pages | 148-158 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Messay Asgedom Gobena |
Why money laundering is
nurtured in Ethiopia?
Messay Asgedom Gobena
Department of Peace and Security Studies, Addis Ababa University,
Addis Ababa, Ethiopia
Abstract
Purpose –The purpose of this paper is to examine the divers and facilitators of money laundering in
Ethiopia. Specifically, it looksat the risk factors that existed in the country’s economic and political system,
which providean appealing environment for money launderingto grow.
Design/methodology/approach –This qualitative study relies on primary data generated from
interviewees drawn from the NationalBank of Ethiopia, Ethiopian Financial Intelligence Center, Ethiopian
Customs Commission,selected financial institutions and certain non-financialbusinesses and professions and
law enforcement agencies, as well as secondary data from government reports, media press, statutes and
other onlineand offline sources.
Findings –This study finds thatthe risk factors for the growth of money laundering in Ethiopia are highly
reliant on the country’s economicand political system. Accordingly, the nature of Ethiopia’seconomy, which
is cash-intensive,loosely regulated economic growth and the raise associated criminality, the developmentof
undergroundbanking activities, scarcity of foreign currency reserves and the existenceof societal demand for
illicit goods and services are allrisk factors for the growth of money laundering. The raise of an elite cartel
model type of systematiccorruption, limited institutionalcapacity to prevent and suppress money laundering
and the absence of a national identity card system are also identified as risk factors for the rife of money
laundering in Ethiopia. Moreover, the geopoliticallocation of the country, its porous borders, limited cross-
border cooperation and information sharing add further fuel to the vulnerability of the country to money
launderingand associated predicate offense.
Originality/value –To the best of the author’s knowledge,this paper provides a first-of-its-kind analytical
perspectiveon the risk factors for the raise of money laundering in Ethiopia.
Keywords Ethiopia, Money laundering, Risk factors
Paper type Research paper
Introduction
Ethiopia had one of the world’s fastest-growing economies (International Monetary Fund
(IMF), 2018;World Bank, 2016). Since 1991, specifically after 2003, the country has
registered commendable economic growth and development. The greater the economic
progress of the country, the higher the integration of the economywith global and regional
economies and the better it is for criminals. Criminals want their share from the growing
economy and the removal of barriers to the free movement of goods and capital –
globalization providesgreater opportunity for those who would opt to conceal their criminal
misdeeds either throughinvestment or other mechanisms.
Money laundering is a growing issuethat threatens not only the probity and stability of
the financial system but also the safety of the society and the national security of Ethiopia.
Thus, in this article, the author examines the structural factors that existed in Ethiopia’s
economy and political system that provide a good opportunity for money launderers. This
article is organized into five sections, including introduction and conclusion. Section 2
covers the contribution of the country’s economic system to money laundering. Section 3
JMLC
26,1
148
Journalof Money Laundering
Control
Vol.26 No. 1, 2023
pp. 148-158
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-09-2021-0090
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