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Cablegate: Banks Recogonize Need for Anti-Money Laundering Regime

VZCZCXRO5753
RR RUEHROV
DE RUEHDS #3321 3181053
ZNR UUUUU ZZH
R 141053Z NOV 07
FM AMEMBASSY ADDIS ABABA
TO RUEHC/SECSTATE WASHDC 8549
INFO RUCNIAD/IGAD COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS ADDIS ABABA 003321

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN EINV PTER ET
SUBJECT: BANKS RECOGONIZE NEED FOR ANTI-MONEY LAUNDERING REGIME

REF: ADDIS ABABA 06 2736

1. SUMMARY: In continued efforts in capacity building and training
in the financial sector in Ethiopia, representatives of the U.S.
Treasury Department met with banks in Ethiopia to discuss current
anti-money laundering (AML). All 11 of Ethiopia's banks reported
that they do not currently have adequate AML controls, and recognize
the need to implement them. Bank officials indicated willingness to
receive technical assistance and training. The National Bank of
Ethiopia (NBE) recently signed the terms of reference for an AML
capacity-building program with the U.S. Department of the Treasury,
showing that Ethiopia stands ready to address AML issues. END
SUMMARY.

2. Since March 2007 two representatives of the U.S. Treasury
department have been working with the Legal Department and Foreign
Exchange directorate of the NBE to develop a terms of reference
(TOR) and work plan for a project for a technical assistance in the
formation of an anti-money laundry and counter terrorist financing
(AML/CFT) regime and financial intelligence unit (FIU) in Ethiopia.
The NBE Bank Governor signed the TOR on November 6, which will allow
the formal technical assistance program to begin.

3. As preliminary outreach in anticipation of the technical
assistance, the Treasury team met with representatives of Ethiopia's
eight private and three state-owned banks as well as the chairman of
the Budget and Finance Standing Committee of the Parliament to brief
them on AML and gauge the current level of AML efforts. All eleven
banks stated that there is no AML legislation, but that they have
built-in systems of internal and external audits. Banks also said
they are under pressure for AML controls from their correspondent
banks and stated they are very much interested in the technical
assistance proposed by Treasury.

4. Treasury representatives noted to EmbOffs that the controls in
place in Ethiopian banks are not adequate to prevent
money-laundering activities. Additionally, they expressed concern
in the growing number of seemingly-unregulated money transfer
systems, including an on-line hawala, Birrituexpress.com.

5. COMMENT: Treasury's interviews with banks indicate a current
lack of AML capacity in Ethiopia, both legislatively and through
adequate internal controls in the banks, leaving Ethiopia open to
becoming a conduit country for money laundering. Draft legislation
has been proposed and is described as "good" by Treasury
representatives. NBE's formal agreement to the TOR for Treasury
technical assistance signals the Government of Ethiopia's
willingness to engage in this important sector. Work on the
technical assistance is expected to begin in December. END
COMMENT.

YAMAMOTO

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