Ethiopia’s capital market regulator has introduced two new regulatory frameworks aimed at bolstering anti-money laundering and counter-terrorism financing (AML/CFT) compliance across the country’s emerging capital market.
The Ethiopian Capital Market Authority (ECMA) said the new Customer Due Diligence (CDD) and Reporting Guideline and the AML/CFT Compliance Training Regime are designed to promote transparency, accountability, and investor protection in line with international standards, including those set by the Financial Action Task Force (FATF).
Due Diligence and Reporting Rules
The CDD guideline establishes detailed procedures for identifying and verifying clients and beneficial owners, assessing risks, and reporting suspicious transactions.
Under the new framework, capital market service providers must apply a risk-based approach, conducting simplified, standard, or enhanced due diligence depending on the customer’s risk profile.
Enhanced scrutiny will be required for politically exposed persons (PEPs), while cash deposits for funding trading accounts are explicitly prohibited to reduce money-laundering risks.
Licensees are also required to retain customer data for ten years and submit an annual control report to ECMA detailing their compliance systems and risk management outcomes.
Suspicious transaction reports must be filed with the Financial Intelligence Service (FIS) when transactions appear unusual in size, type, or pattern, or suggest potential links to money laundering or terrorism financing.
Mandatory Training and Certification
In a parallel move, ECMA introduced a mandatory AML/CFT training regime for market intermediaries and capital market service providers. The framework outlines compulsory onboarding and ongoing training for staff to strengthen sector-wide competence and awareness.
Each firm’s Chief Compliance Officer (CCO) will oversee annual training programs and ensure that knowledge gaps identified in audits are addressed.
Professionals in high-risk functions—such as portfolio managers, brokers, dealers, market makers, compliance officers, and financial advisers—will be required to obtain professional certification, with AML/CFT content accounting for 10–15% of the exam.
Training modules will cover due diligence processes, identifying beneficial owners and PEPs, analyzing money-laundering mechanisms, and preparing suspicious transaction reports.
Aligning with Global Standards
The new rules mark a key milestone in Ethiopia’s efforts to establish a secure and credible capital market as the country prepares for broader participation by investors.
ECMA said the measures aim to “foster a culture of integrity and continuous learning,” ensuring Ethiopia’s financial sector aligns with global AML/CFT benchmarks and builds investor confidence.
