Effectiveness of Anti-money Laundering Preventive Measures in Ethiopia: Case Study on Commercial Banks and Financial Intelligence Center.

Abstract

This study aims to assess the effectiveness of anti-money laundering countermeasures by commercial banks and financial intelligence center. Purposive sampling technique was chosen to get the required sample size. About ten banks on the basis of year of establishment and assumed to have best experience in handling money laundering were targeted to study. Data gathered were analyzed based on 57 responses and additional interviewee. Descriptive statistics research approach was employed. All out puts were reported using frequency. The result indicates that even though banks have senior compliance officers who have relevant competence and authority to oversee the bank’s AML/CFT compliance program, banks did not communicate the AML policies, procedures and manuals. Financial institutions in Ethiopia had internal audit function to assess anti- money laundering and sanctions and practices, but they do not have other independent third party to audit and assess money laundering. The absence of national ID card for customers and absence of technology to improve AML/CFT activities and the law concerning KYC requirements and other preventive measures suffer difficulty and such gaps create a suitable ground for money launderers to exploit the banking system. The study recommends that Banks ought to have appropriate procedures and policies, and financial intelligence center with banks should investigate politicians, statesmen, ministers.