NBE Issues Directive to Prevent Use of Personal or Third-Party Accounts for Commercial Transactions













Addis Ababa, October 2025 — The National Bank of Ethiopia (NBE) has issued a stern directive to all banking institutions to crack down on business operations conducted through individuals’ personal or third-party accounts. The move is part of a broader effort to strengthen financial oversight and address risks linked to tax evasion and illicit finance.

Background & Legal Basis

The directive is grounded in Proclamation No. 1359/2017, which empowers the NBE to regulate and supervise financial institutions across Ethiopia.

The bank has reported that a substantial number of business organizations and individual traders are using personal bank accounts or third-party accounts to carry out transactions—rather than using the business accounts they registered with tax authorities.

This practice circumvents routine scrutiny by tax collection agencies and undermines transparency in the financial system.

Risks and Red Flags

According to the NBE statement, transactions conducted in this manner may facilitate money laundering, financing of criminal activities, or terrorist funding, since they evade formal oversight.

The central bank warns that such arrangements may mask the true nature or source of funds, making it difficult for regulators and law enforcement to trace suspicious flows.

In addition, by sidestepping business-registered accounts, these transactions weaken the ability of the tax authority to monitor revenue, detect underreporting, and audit proper compliance.

Directive to Banks & Implementation Measures

All commercial banks have been instructed to identify customers engaging in commercial activities through personal or third-party accounts.

Banks must submit reports and detailed information about these customers to relevant regulatory bodies.

The NBE has called for a coordinated response involving tax authorities, anti-money laundering units, and law enforcement agencies to follow up on flagged cases.

Motivation & Policy Rationale

The primary goal is to preserve the integrity and soundness of Ethiopia’s financial system. By restricting misuse of accounts, the NBE aims to reduce systemic risk.

The NBE also frames this measure as essential to economic security — ensuring that illicit capital does not undermine national development.

As Ethiopia has been rolling out reforms in taxation and financial regulation, this directive aligns with recent efforts to modernize revenue mobilization and clamp down on revenue leakage.

Implications for Businesses and Traders

Business entities—especially small and medium enterprises—must ensure they are using properly registered business accounts for all transactions.

Individual traders using personal accounts for business must regularize their operations and register with tax authorities.

The directive raises the possibility that banks may impose account freezes, sanctions, or closure on those who flout the rules.

Potential Challenges & Points of Friction

In practice, enforcing this policy may require enhanced compliance systems within banks to flag and monitor account usage patterns.

Some businesses may resist or delay compliance, arguing that personal or third-party accounts are convenient or exist for legacy reasons.

The coordination between the NBE, tax authority, and law enforcement will be critical. Gaps or delays in information sharing could weaken enforcement effectiveness.

Next Steps & Outlook

The NBE is expected to issue guidelines or clarifications to banks to standardize the identification and reporting process.

Audits and inspections may follow to assess compliance across the banking sector.

In high-risk or repeat violation cases, the authorities may pursue legal action or penalties under relevant financial, tax, or anti-money laundering laws.

Over time, this directive could help broaden Ethiopia’s formal tax base, reduce shadow economy activities, and enhance the transparency of the banking sector.