Ethiopia flags real estate as laundering risk as sector opens to foreign buyers

Ethiopia's real estate sector risks being used to launder criminal proceeds and finance terrorism as the industry expands and opens to foreign investment, officials said at a workshop on 21 October 2026 convened to review the Real Estate Sector Money Laundering and Terrorism Financing Risk (Threat-Vulnerability) Study.

Mulugeta Temesgen, director of the Supervision and Compliance Directorate at the Financial Security Service, said the sector handles a high volume of financial transactions and requires special scrutiny. “The sectoral risk assessment presented in the study is of multi-sectoral significance and will help close longstanding gaps in light of Ethiopia's actual conditions,” he said.

According to the study, Ethiopia lacks a functioning national identification system and a central beneficial ownership registry, making it difficult for reporting entities to verify who ultimately controls or benefits from a property transaction. Document authentication and registration are handled exclusively by government agencies rather than licensed notaries, and those agencies are not currently designated as reporting entities under the anti-money laundering framework.

The assessment also found that real estate agents have historically lacked fit-and-proper tests and risk-based supervision, although reforms have begun to address this, and that construction companies and developers often remain outside the scope of AML obligations. Cash-based and informal transactions further reduce audit trails, and combined with high-value, appreciating assets, these conditions make property an attractive destination for proceeds of corruption, tax evasion and other predicate offences.

Abraham Liyew, the UNODC's country representative in Ethiopia, said the sector's economic value must not come at the expense of security. “While the sector plays a significant positive role in national growth and the economy, criminals increasingly target real estate to disguise illegally obtained money as legitimate investment,” he said.

Ethiopia was placed on the Financial Action Task Force grey list in 2017 and, after reforms that included a stronger financial intelligence service and joint onsite inspections of real estate firms, was removed in 2023. The review comes as construction contributes about 11 percent of GDP and grows at almost nine percent a year, while Addis Ababa faces a housing deficit exceeding one million units and the 2024 Real Estate Proclamation opened the sector to foreign developers.