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BusinessRegulator issues stern warning to CSOs over banking transgressions

Regulator issues stern warning to CSOs over banking transgressions

Ethiopia’s civil society regulator has issued a stern warning to non-profit organizations after suspicions of improper bank account use and foreign currency diversions.

Failing to obtain proper approvals for bank accounts and diverting foreign currency revenues overseas are some of the transgressions spotted among the organizations by officials at the Authority for Civil Society Organizations (ACSO), who have been compelled to issue a warning.

In a notice publicized on September 14, 2023, the Authority reported signs that several civil society organizations (CSOs) may have engaged in unlawful conduct related to bank account usage.

Organizations cannot open a bank account without the knowledge of the licensing Authority, as per the CSO proclamation.

The warning notice was issued as a reminder for organizations to respect this law, according to the Authority’s Deputy Director, Fasikaw Molla. He disclosed that a third party individual was operating the bank accounts of a few organizations.

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“There are a few cases that we are currently checking and it is impossible to explicitly provide details on. But we have come across a few organizations opening bank accounts without our approval, conspiring with the banks,” he told The Reporter.

Bank accounts must be held solely in the organization’s name, according to the Authority’s rules. Officials are prohibited from opening accounts under personal names or delegating financial administration to third parties outside of the organization.

“According to our findings, we had to remind them to comply with this provision of the proclamation,” he said. The Authority gave warnings to a few organizations while suspending others.

Fasikaw’s office, tasked with licensing CSOs and monitoring their operations to ensure compliance with regulations, focuses on financial activities as well during oversight.

Regarding foreign currency earnings, the onus is on CSOs to bring all hard currency into the country and managing those funds in accordance with the rules of the National Bank of Ethiopia (NBE).  A few of the CSOs are suspected of diverting those funds to unrelated external groups, according to the Authority.

“We didn’t have tangible information, but this was indicated in our monitoring work,” Fasikaw said.

Coordinating with the NBE and other partners, the regulator is readying itself to take action against those found breaching the law. “If they keep doing that, they will face suspension of licenses and termination of activities,” he said.

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