Africa-Press – Ethiopia. August 7, 2025 3 minutes read Addis Abeba – The National Bank of Ethiopia (NBE) has issued a strong warning to the business community and members of the diaspora to stop using the informal foreign exchange market, as part of a broader effort to “stabilize” the country’s financial system and curb illegal currency flows. The announcement stated enforcement actions by the bank, including threats of asset confiscation and international coordination against foreign-based money transmitters.
In a video message released on Wednesday, Governor Mamo Mihretu said individuals and businesses operating outside the formal banking system will face serious consequences. “Measures, including confiscation, will be taken against those who do not use the regular banking system for foreign exchange,” he said at a recent briefing. The Governor asserted that the NBE will continue to conduct foreign currency auctions supported by a threefold increase in its reserves over the past year, with recent inflows surpassing expectations in the new fiscal year.
The latest auction saw 28 banks participate, with $150 million sold at an average rate of 138 birr per dollar. Mamo confirmed that banks will provide sufficient foreign currency to their customers starting this week, estimating that the business community currently receives approximately $500 million in foreign currency monthly. He urged merchants to take full advantage of this growing supply and discouraged reliance on the parallel market, adding that complaints about lack of access to currency are being resolved.
The Governor also addressed long-standing concerns over bank practices – such as demanding birr deposits exceeding the value of letters of credit (LCs) – saying such requirements are now prohibited. He encouraged the public to report any non-compliant banks directly to the NBE. “Banks are now expected to fulfill requests within a few days,” he added.
The latest warning comes on the heels of a 2 August statement from the NBE, which publicly named four U.S.-based money transfer service providers accused of laundering funds and financing illicit activities using remittances from the Ethiopian diaspora. The named companies include Shgey Money Transfer, Adulis Money Transfer, Ramada Pay (Kaah), and TAAJ Money Transfer, operating in Virginia and Minnesota. Among the four, TAAJ Money Transfer, has pleaded guilty to violating the U.S. Bank Secrecy Act, according to a June 2024 statement from the U.S. Attorney’s Office for the Southern District of California.
“These entities are actively working to undermine the integrity of Ethiopia’s financial system and distort market prices,” the NBE stated. The central bank confirmed it has requested cooperation from authorities in the United States to launch investigations and advised Ethiopians abroad to immediately cease using these services. It warned that funds sent through these channels may be confiscated and are not guaranteed to reach their intended recipients.
Governor Mamo reiterated that action against foreign-based illegal money transmitters – particularly those operating from the United Arab Emirates – is ongoing and will intensify. “We are working to shut down operations that deliberately destabilize the currency market. The message is clear: only the formal system is safe and legal,” he said.
The measures are part of a broader campaign by the National Bank to stabilize foreign exchange markets, protect financial integrity, and ensure that foreign currency, critical for imports and economic recovery, flows through regulated channels, according to the Governor.
In a report released on 15 July following its Article IV Consultation and the third review of Ethiopia’s program, the International Monetary Fund (IMF) acknowledged steps taken by Ethiopia toward foreign exchange reform, which has seen the country’s hard currency reserves triple to $2.7 billion for the first time in years, but highlighted enduring problems in the currency market.
A central bank commission of 2.5% on FX sales, limited interbank liquidity, and high transaction costs have helped sustain a 15% parallel market premium, the IMF said, and cautioned that these distortions complicate macroeconomic stability efforts and undermine investor confidence.
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