The Ethiopian Finance Intelligence Service suspended more than 20 million USD that it said had been illegally amassed through diaspora accounts in Ethiopian banks.
The intelligence service reported that it has suspended foreign currency amounting to 20,226,583 USD in banks through the investigation and follow-up of the illicit act that 85 individuals have been involved.
The Diaspora account, which can only be opened in US dollars, pounds sterling, and euros, is a deposit account meant for Ethiopians and foreigners of Ethiopian origin living abroad to open and use foreign currency accounts in their home country.
Yohannes (name changed) is an economist and advisor to various international organizations. He told Addis Zeybe that the diaspora account was initiated to overcome the imbalance between the demand for foreign currency and the actual foreign currency generated by the country.
According to the Finance Intelligence report, the crime was committed by make-believe of returning from abroad while being in the country and using a fake declaration; Bringing in a lower amount of foreign currency and pretending to have a higher amount, and fetching the rest from the black market with a false declaration document; using other’s declaration as one’s own; and opening diaspora accounts in different banks against the law.
The economics expert highlights that the National Bank of Ethiopia must strengthen its arms for protecting and regulating financial institutions against fraudulent acts by leveraging technology and increasing human resources. He said, to avoid such kinds of embezzlement, financial institutions in general, and banks in particular should scrutinize their systems repeatedly and timely.
The Finance Intelligence Service said it has transferred the case to the criminal investigation to take measures on the alleged perpetrators and cautioned those who are part of such illegal acts.
Yohannes remarked that such reports are publicized after the transaction accrued, while there should be a mechanism to detect such acts before transactions and that it is critical to take the necessary proactive measures.
“It is not the amount of the dollar, but what matters is the transaction and the resulting risk effect of the transaction on the financial institutions and their systems; a small amount of fraud may result in systematic risk, whereas a great amount, on the other hand, might entail a small risk,” he added.
While disclosing the freezing of 391 bank accounts that were claimed to be engaged in illegal foreign currency transfers in October, Yinager Desie, Governor of the National Bank of Ethiopia, said “the illegal transaction and exchange of foreign currencies has been contributing to the existing inflation and the trading system. Administrative actions are being taken against entities engaged in illegal foreign currency transfer activities”.
The government has recently set up an attractive reward system for citizens who would report and give information about illegal financial acts as well as actors involved, especially in foreign currency transfer and exchange.