Ethiopia’s central bank has called for an official U.S. investigation into four Somali-owned money transfer companies, accusing them of money laundering and financing illicit activities using funds from the Ethiopian diaspora.
The National Bank of Ethiopia (NBE) named ‘Shgey Money Transfer, Adulis Money Transfer, Ramada Pay (Kaah), and TAAJ Money Transfer’ in an August 2nd statement. It alleges these firms, operating in Maryland, Virginia, and Minnesota, are “undermining the integrity of the Ethiopian financial system and distorting market prices.”
“The NBE advises the Ethiopian public to avoid these entities to ensure their funds are transferred safely and legally,” the statement warned, adding transferred funds are “at risk of confiscation” with “no guarantee” of delivery to recipients. The bank has contacted U.S. authorities requesting cooperation.
Lifeline at Risk:
While targeting funds from the Ethiopian diaspora, the move directly impacts vital Somali-operated remittance corridors. Firms like Kaah and TAAJ are pillars of a transnational support system crucial for families in Ethiopia’s underserved Somali Regional State, where formal banking access is just 6%. These remittances often pay for essentials like food, healthcare, and school fees in remote towns largely bypassed by formal banking.
Economic Reform Context:
The warning coincides with Ethiopia’s major IMF-backed foreign exchange reforms ($3.4 billion program), aimed at unifying rates and dismantling the parallel market. Despite IMF praise, challenges persist, including a significant gap between official and black-market exchange rates. Diaspora remittances remain critical, contributing over $6 billion (nearly one-third of official FX earnings) in 2023/24, primarily from North America.
Shift in Regulatory Tactics:
Publicly naming and discouraging use of specific operators marks a sharp departure from the NBE’s previous reliance on behind-the-scenes audits or license suspensions. The bank simultaneously published an updated list of over 80 licensed money transfer agencies (including major players like Western Union, MoneyGram, and a few Somali-facing services) and stressed that “cross-border fund transfers be conducted through the formal and regulated financial system.”
The NBE stated it will continue investigations and take further action as needed. A.list of licensed and legally authorized money transfer operators is available at the official National Bank of Ethiopia website.
