Factors for Effective Anti-Money Laundering Compliance in the Ethiopian Banking Industry

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The study aims to examine factors for effective Anti-Money Laundering compliance in the Ethiopian banking industry. In line with this, the study investigates the effect of legal enforcement mechanisms, institutional capacity, international cooperation, technological advancement, and practical challenges on the implementation of anti-money laundering regulations. The target populations of the study the researcher generalize the results are 18 banks in Ethiopia, the National Bank of Ethiopia (NBE) and Ethiopian Financial Intelligence Center (EFIC). This study employed both quantitative and qualitative approaches (mixed approach) to gather data. Hence, purposive sampling was used, and 141 questionnaires were distributed to division managers, senior compliance officers, and compliance officers of 18 Ethiopian banks directly responsible for the implementation of the AML regulation. For more comprehension 8 key informants were included. Also, the study employed both descriptive and explanatory research design. Among others, the study findings revealed that Ethiopian banks are vulnerable to predicate offences of serious criminal activities listed on AML directive like corruption, tax evasion, human trafficking, contraband, fraud, illegal-hawala, arms trafficking, market manipulation counterfeiting currency and robbery. Legal enforcement mechanisms, institutional capacity and international cooperation along with the integrity of FIC officers are found to be the key factors for AML compliance. Finally, but most importantly Ethiopian Financial Intelligence Center (EFIC) and National Bank of Ethiopia (NBE) shall make regular inspections of banks to ensure effective implementation of the Anti-Money Laundering (AML) compliance.



AML Regulations, Ethiopia’s Banks, Ethiopian Financial Intelligence Center