When Risk Becomes Crime

Welcome to the 92nd edition of ፍራንክ Digest!

Your weekly brief on all things Finance and Investing. Quick, enjoyable reads for busy professionals in 5 minutes or less.

Here’s what’s coming your way:

• 🧑‍⚖️ Financial Crimes: ኢትዮጵያ edition

• 🖨️ Ethiopia’s Going To Print Money At Home. Uh-oh.

• 🖼️ Big Picture + Frank’s Take

Thanks for reading!

White Collar Crime: Can Finance Be Used for Evil?

Investing

Yes. Yes it can.

But we have an article to write, አይደል? So let’s get to it:

Ethiopia established the Deposit Insurance Fund a little over a year ago now. 

The goal: protect your cash deposit at any bank (up to ETB 100,000). Money can be stolen or the bank can fail → we’ve yet to see that last scenario pan out in the land of origins but who says you can’t put flood insurance on a hut in the Sahara. 

Message: you can never be too safe 🤷‍♀️.

Having said that, financial markets and business environments in Ethiopia are twin babies sucking on pacifiers, rolling around in diapers pushing on the hard wood rails of their cribs. They are both in their infancies so sophisticated scams are not typically on the menu.

But if that image represents a rowdy Saturday afternoon for you (you are a parent and enjoying the chaotic life), then you are old enough to know that during your lifetime, very few have seen the insides of a prison cell because of financial misconduct. Ethiopia’s weak financial environment lacks transparency and accountability until…investors get antsy and even then, the legal framework isn’t there to take the necessary steps of getting your money back.

The dictionary definition of a financial crime is any activity that allows an individual or group to unlawfully gain financial assets (including money, securities, or other property)

For a financial activity to be considered as a crime, it typically has to involve a large amount of money, where the unlawful gains tend to be obvious and affect a large list of people. 

Take Bernie Madoff’s $65B scandal for instance.