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Ethiopia’s Financial Intelligence Service (FIS) announced that the bank accounts of 138 individuals suspected of engaging in “illegal foreign currency crimes” have been frozen as part of a crackdown on parallel market transactions.

According to a statement issued to state media, the suspects were identified through “ongoing surveillance efforts” and are accused of operating “outside the country’s formal financial system, bypassing legal banking channels”.

The Service said the action aims to address persistent violations despite repeated government warnings. However, it provided no details of the 138 alleged suspects.

FIS stated that Ethiopia has “clear legal procedures” governing cross-border money transfers, and recent macroeconomic reforms – including a move toward a market-determined exchange rate ,have “helped increase the formal supply of foreign currency.”

However, the agency warned that foreign currency transactions must be conducted “strictly” through the formal banking system. “Violations will lead to severe legal consequences, including imprisonment and asset confiscation,” the statement said.

It further noted that some individuals and entities continue to treat illegal currency trading as a “standard business practice,” undermining ongoing efforts to stabilize the financial system.

The announcement came in the heels of a statement on Wednesday by the National Bank of Ethiopia (NBE) warning the business community and members of the diaspora to avoid informal exchange channels, stressing that enforcement measures – including asset seizure and international cooperation against unlicensed foreign-based money transfer services – would be pursued.

In a video message, NBE Governor Mamo Mihretu reiterated the Bank’s commitment to tighten control over the sector. “Measures, including confiscation, will be taken against those who do not use the regular banking system for foreign exchange,” he said.

Governor Mamo also revealed that the central bank has tripled its foreign currency reserves over the past year and that recent inflows have exceeded expectations in the new fiscal year, strengthening the country’s capacity to meet demand through formal auctions.

On 02 August, the NBE 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.