June 20, 2024

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financial crime

Ethiopia Struggles with Rising Digital Financial Crime

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Financial crime is a main problem that affects people, businesses, and countries. As Ethiopia becomes more digital, people need to know how to protect themselves from fraud and scams. The Ethiopian Federal Police wants to stop digital financial crime. In this regard, today the Ethiopian Federal Police held a meeting with the National Bank of Ethiopia’s Governer, the Commercial Bank of Ethiopia, and the presidents of private banks.

Commissioner General Demelash G/Michael highlighted the need to raise awareness among customers, bank staff, and law enforcement as technology advances, leading to increased risks of financial crimes.

Ethiopia’s National Bank Governor, Mr. Mamo Mihretu, has acknowledged that digital finance-related crimes are a significant issue. He emphasized that it is unrealistic to avoid digital finance altogether and instead, it is crucial to find effective solutions to address these problems.

In the Financial Stability Report April 2024, the National Bank of Ethiopia stated that there is significant operational risk in the Ethiopian commercial banking industry and is expected to rise further. Additionally, NBE confirmed in the Financial Stability Report that the cost of bank fraud and forgeries almost doubled to Birr 1.0 billion in just a year. These cases occurred at 20 banks. Moreover, an increasing number of banks are applying to introduce digital micro-credit & saving services that are provided through partnerships with third parties. As a consequence, incidences of fraud and embezzlement could increase.

Today, Governor Mamo Mihretu said that to stop digital finance crimes, we need to work on several things: technology, laws, cooperation, and making people aware of the problem. He also mentioned that using digital IDs could be a good solution. Interestingly, last month, Yodahe Arayaselasie, the CEO of the National ID Program shared the statistics that over 40% of the population of Ethiopia does not have the necessary identification documents. However, to address this issue, the Ethiopian government is working together with banks throughout the country. The Ethiopian government collaborated with 32 banks.

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