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
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
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
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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
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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.
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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.
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Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
Ratings – Effectiveness (1/3)
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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
Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
Ratings – Effectiveness (2/3)
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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
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
Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
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HighSubstantialModerateLow
Ratings – Effectiveness
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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
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
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
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)
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)
Anti-money laundering and counter-terrorist financing measures in Ethiopia – Mutual Evaluation Report – May 2015
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CompliantLargely compliantPartially compliantNon-compliantNot applicable
Ratings – technical compliance
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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
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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
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