Ethiopia’s growing remittance sector is facing a crackdown as authorities target unlicensed money transfer operators and cryptocurrency traders for avoiding national regulations.
In a coordinated operation announced yesterday, the National Intelligence and Security Service (NISS) confirmed the arrest of 112 suspects, including foreign nationals. Additionally, over 500 bank accounts suspected of being linked to money laundering, illegal foreign exchange dealings, and tax evasion have been frozen.
Authorities have also launched a crackdown on underground hawala networks and digital transfer operators that have been transferring substantial amounts of money without the approval of the National Bank of Ethiopia (NBE).
This action comes after months of surveillance, as the government grows increasingly concerned about informal money transfer channels. These channels have been expanding due to remittances from Ethiopians living abroad.
A Hidden Economy Built on Trust and Risk
Ethiopia’s diaspora, estimated at over three million, remits approximately $5.6 billion annually, according to World Bank data. However, much of this bypasses official channels, as informal systems offer quicker, cheaper transfers, but at a significant economic cost.
Security officials report that underground networks are draining foreign exchange reserves and facilitating terror financing and smuggling. A recent operation by the Federal Police and the Financial Security Service disrupted several illegal networks operating alongside licensed platforms like Telebirr, M-Pesa, EthSwitch, Dahabshiil, Western Union, HelloCash, and Amole, according to the Ethiopian Business Review.
“These illegal activities continue to cause significant damage to the economy,” the NISS said in a statement, vowing to intensify investigations in the coming weeks.
Building a Safer Path for Digital Money
The National Bank of Ethiopia aims to fully regulate the country’s remittance ecosystem. NBE Governor Eyob Tekalign stated they are deploying advanced monitoring systems to identify unlicensed operators and will impose strong enforcement measures against violators.
However, the bank is also offering a softer landing for operators willing to regularise their activities.
For legitimate fintechs, the crackdown offers opportunities to expand in the remittance market as informal systems weaken. Formalising these flows could also strengthen Ethiopia’s reserves and reshape cross-border money movement, enhancing financial safety and transparency.