- Central bank sues 112 over unlicensed money transfers
- Crackdown aims to safeguard Ethiopia’s foreign exchange reserves
ADDIS ABABA, ETHIOPIA – Ethiopia’s central bank has launched legal action against 112 individuals and entities accused of running unlicensed remittance operations, stepping up efforts to control foreign currency flows.
The National Bank of Ethiopia (NBE) said Monday that the crackdown targets dealers and fund providers allegedly involved in unauthorised cross-border transfers. The move, it said, forms part of a wider strategy to ensure that all remittances – a key source of hard currency for the Horn of Africa nation – are channelled through official and transparent systems.
“The use of the formal financial system to carry out unauthorized activities undermines confidence in the market and poses risks to the country’s monetary stability,” the NBE said in a statement.
“We remain committed to protecting the integrity of Ethiopia’s financial system while ensuring that foreign exchange inflows are managed through legitimate, regulated channels.”
Anti–money laundering drive
The announcement followed strong warnings from NBE Governor Eyob Tekalign during the IMF–World Bank Annual Meetings in Washington last week. He said the government would take firm action against illegal operators who continue to evade regulation despite repeated appeals to join the formal financial system.
“Many hawala merchants have refused to comply,” Eyob said. “Their activities undermine confidence in our banking system and disrupt exchange rate management.”
Industry estimates suggest Ethiopia receives more than $5 billion in annual remittances, but a significant share is thought to flow through informal channels, depriving the government of much-needed foreign currency.
“This undermines foreign exchange reserves, complicates exchange rate management, and limits the government’s capacity to stabilise the national currency,” the NBE statement said.
To encourage compliance, the central bank has begun publishing a list of licensed money transfer operators and urged Ethiopians at home and abroad to use only authorised providers. The bank is also working with commercial banks to improve digital remittance platforms and shorten transfer times for diaspora clients.
Analysts see crucial step toward reform
Analysts say the crackdown reflects the central bank’s determination to stem illicit financial flows and strengthen foreign reserves amid persistent shortages of dollars and inflationary pressures.
“This is both a regulatory and economic necessity,” said a financial analyst familiar with the issue. “Formalising remittance channels improves transparency and strengthens the central bank’s ability to manage liquidity and reserves.”
The NBE is expected to complement enforcement with incentives that make formal remittance systems more attractive — including better exchange rates and lower transaction fees.
As the legal proceedings advance, economists say the broader test for Ethiopia’s policymakers will be to balance tighter regulation with the need for innovation and inclusion in a fast-evolving financial sector.
“The ultimate challenge,” the analyst added, “is ensuring that the system works for ordinary citizens while protecting the economy from destabilising flows.”
