Combating financial crimes through strengthening system, cooperation


It was last July that the Egmont Group under its 26th plenary meeting endorsed the membership of Ethiopia along with five countries. The country has joined the global financial network aimed at combating financial crimes in collaboration with various countries and organizations. This would help to combat crimes and perhaps to regain the finance that left the nation via illicit mediums.

The major stems of illicit financial flows in Ethiopia are money laundering, bribery, tax evasion, mis-invoicing. This had been exposing the country to economic and political instability, said Ethiopian Finance Intelligence Center Director General Kidanemariam Gebresadik in a press conference recently organized by the Ministry of Peace (MoP).

According to Global Financial Integrity (GFI) estimations, between 2005 and 2014, an estimated average of 3.1 million USD left Ethiopia illicitly. This is equivalent to 29 percent of the country’s total trade and 97 percent of the total aid inflows to the country or 30 percent of the government’s total revenue, according to the report.

The data also show that between 55 and 80 percent of the illicit financial outflows leaving Ethiopia originate through trade misinvoicing, which amounts to an estimated 23 percent of the total value of the country’s trade, Transparency International report published on September 2018 indicated.

Not only this, the illicit financial flow and other financial crimes affected country’s economy in terms of suspension of foreign trade and investment flow, according to Kidanemariam. The country has been stayed under especial inspection by the International Co-operation Review Group (ICRG) as one of the world countries that have high risk related to financial crimes.

Due to this, various countries under EU have been imposed extended scrutiny on Ethiopia’s foreign trade and investment. There are various investments that have suspended while they are enthusiastically moving to settle in Ethiopia, he said. Moreover, organized crimes have been destabilizing the nation supported by illicit finance to gunrunning.

However, the effort that has been exerted over the past 11 months has paid the country back to be released from the special inspection. Accordingly, ICRG informed the government through its report that it has lifted the distinctive inspection that has been imposed on country’s economy since 2017. On October 17/2019 the organization commended that the country’s effort and the political commitment to prevent financial crimes is progressive.

This would help the country to get back to the regular international inspection follow up which allows the nation to attract more investment as the foreign investors would not be inquired extra assessment to invest in Ethiopia, said MoP Minister Muferihat Kemil. The report would also help the country to hasten exchange transactions during import-export trade with EU member countries. It will enable Ethiopian banks to strengthen business to business relationship with cross border legal financial institutions in relation to correspondence banking system, according to the minister.

Under the report, the ICRG initiate the country to install a system and prevent financial crimes regularly in collaboration with partners to ensure rule of law and progressive economic growth. Therefore, the report would help to return treasures and legally keep in hand. There are various investors that have detained while they are enthusiastically moving to invest in Ethiopia. Hence, the report would release them and settle in this country supporting the economy, she said.

The government is also working to realize the national system in each intended bodies and build the capacity of financial and security institutions to ensure rule of law in keeping national treasures, as to Muferihat.

The country has established a national committee led by the Peace Minister. Currently, it is underway to conduct a national risk assessment that will focus on financial crimes and puts recommendations to prevent it in priority. The study is aimed at curbing the problem from grassroots level with fact based ground through investigating the root causes and identifying role players. The preparation to the study which planned to be conducted in each two years is at the final stage.

Moreover, strengthening the diplomatic cooperation via Egmont Group would enable the nation to retake its stolen wealth. “We have created a system that enables the government to get information access about any national treasure transported abroad in any illegal conditions,” Muferihat said. Accordingly, the government is undertaking various dealings with some countries on the conditions in which the country can retake it’s wealth that left illegally, she said adding that the returning of finance that illegally left the country is under process so that the government will unveil it to the public when it gets accomplished.

Therefore, the government ought to strengthen its financial institutions, security system and diplomatic cooperation with international partners to practically combat financial crimes so that it would be able protect country’s wealth for national development and improvement of the lives of the people. Not only this, the international cooperation will also help to regain the illicitly transferred money to abroad.

The Ethiopian Herald November19, 2019