Cash Notes Holding Limits for Foreign Investors and Travelers to Ethiopia
I. Introduction
Foreign investors and travelers need to understand Ethiopia’s Foreign currency regulations about Cash Notes Holding Limits to comply with local laws and avoid potential legal issues. This brief outlines critical aspects of such cash notes holding limits, responsibilities, and restrictions imposed on banks, foreign investors, and travelers under Ethiopia’s financial regulations.
II. Cash Notes Holding Limits
A. Cash Notes Holding limits by Authorized Banks
- Authorized banks can hold up to 10% of their paid-up capital in foreign currency cash notes as working balance. Excess holdings must be surrendered to the National Bank within five working days after each month’s end.
B. Conversion Requirement
- Banks must provide detailed information, including currency type, serial numbers, and denominations, when presenting foreign currency notes to the National Bank for conversion. The conversion can be credited to a correspondent bank account with a 0.5% service charge applicable.
C. Responsibility of Authorized Banks
- Banks must verify the authenticity of purchased cash notes using reliable machines and maintain records of seller identities. Counterfeit notes discovered during trading will result in penalties debited from the bank’s reserve account.
D. Supply of Foreign Currency Cash Notes
- Authorized banks may request foreign currency from the National Bank, with transactions priced according to the Indicative Daily Exchange Rate.
E. Prohibitions
- Banks are prohibited from engaging in the shipment, ordering, or receiving consignments of foreign currency cash notes.
F. Birr Holding Limit for Persons Entering or Departing Ethiopia
- Travelers can hold up to ETB 3,000 when entering or departing Ethiopia. Exceptions apply for travel to Djibouti or neighboring ports, where the limit is ETB 10,000.
G. Time Limits for Holding and Conversion of Foreign Currency
- Ethiopian residents must convert or deposit foreign currency within 30 days of entry into Ethiopia. Foreign nationals of Ethiopian origin or non-residents staying over 90 days must deposit foreign currency within 90 days. Foreign travelers can hold foreign currency for the duration of their visa.
H. Customs Declaration of Foreign Currency
- Individuals carrying more than USD 10,000 (or equivalent) cash notes must declare it upon entry or exit. Transit passengers and those carrying amounts below this threshold are exempt.
III. Reporting Requirements of Banks
Banks must submit reports to the National Bank of Ethiopia (NBE) on the following:
- Exchange rates used for daily transactions.
- Monthly foreign exchange cash flow.
- Remittances, foreign currency accounts, and transactions by local merchants.
- Permits for imports and exports.
- Transfers of air ticket sales proceeds and other special cases.
These reports must be submitted according to the deadlines and formats specified by the NBE.
IV. Penalties and Inspection
A. Penalties
- Violations of these regulations can result in fines up to USD 2,500 per violation. The NBE may impose additional penalties, including license suspension, revocation, and potential legal action.
B. Inspection
- The NBE has broad authority to inspect authorized banks, merchants, and entities at any time. Inspections can include document reviews, interviews, and audits of financial records related to foreign currency transactions.
V. Conclusion
Ethiopian regulations impose strict controls on cash handling and foreign currency transactions. It is critical for banks, investors, and travelers to comply with these rules to avoid penalties and legal consequences. Adhering to the reporting and operational requirements helps ensure smooth financial transactions and fosters confidence in Ethiopia’s regulatory environment.
If you have questions, comments or need further assistance with legal experts familiar with Ethiopian Forex laws don’t hesitate to get in touch with us.
