Ethiopia’s Financial Intelligence Service (FIS) has frozen the bank accounts of 138 individuals accused of running illegal foreign currency operations, in the latest move to tighten the noose on the country’s parallel market.
The suspects, identified through what the agency calls “ongoing surveillance,” are accused of skirting the formal financial system and moving money outside legal banking channels. FIS offered no names, but made its intention clear: illegal currency trading is no longer business as usual.
“Violations will lead to severe legal consequences, including imprisonment and asset confiscation,” the Service warned in its statement.
The crackdown is being positioned as part of Ethiopia’s macroeconomic clean-up — a reform push that includes a shift toward a market-determined exchange rate. Authorities argue that the policy shift has already helped boost the supply of foreign currency through official auctions, but stress that all transactions must flow through banks.
The Central Bank Turns Up the Heat
Just 24 hours before the FIS announcement, the National Bank of Ethiopia (NBE) fired off its own warning to businesses and the diaspora: stay away from informal channels or face asset seizures and cross-border enforcement.
In a video message, Governor Mamo Mihretu doubled down:
“Measures, including confiscation, will be taken against those who do not use the regular banking system for foreign exchange.”
Mamo also claimed a win — foreign reserves have tripled over the past year, and inflows in the new fiscal year are already ahead of projections. The central bank says it’s now in a stronger position to meet demand through the official FX auction system.
Diaspora Remittances Under the Microscope
The FX enforcement push isn’t just local. On August 2, the NBE named four U.S.-based money transfer operators accused of laundering funds and financing illicit activity via Ethiopian remittances:
- Shgey Money Transfer
- Adulis Money Transfer
- Ramada Pay (Kaah)
- TAAJ Money Transfer – which, according to the U.S. Attorney’s Office in California, pleaded guilty in 2024 to violating the U.S. Bank Secrecy Act.
The move signals Ethiopia’s willingness to work with foreign regulators to shut down unlicensed operators feeding the black market.
Big Picture: FX Reform Meets Enforcement
Ethiopia’s exchange rate reform — including the July 2024 float of the birr — was meant to narrow the yawning gap between official and parallel rates. But that gap still incentivizes illicit trading. This week’s measures show the government’s bet: combine policy reform with hard enforcement to bring more hard currency into the formal system.
The question now is whether this twin strategy can actually shift behavior — or if the underground FX trade will simply move further out of sight.
Source: Addis Standard
