On 12 February 2026 the National Bank of Ethiopia signed Directive No. FXD/04/2026, amending the foreign exchange rules it had issued the previous year. Among a wide set of liberalising changes, one line matters more than its length suggests: service exporters, IT and BPO firms, consultancies, and tour operators earning foreign currency from clients abroad, can now hold 100% of their export proceeds in a retention account indefinitely, with no obligation to convert any portion into birr. The same directive opened forward FX contracts and eased account-opening rules for foreign investors, but for banks that serve this segment, the retention change is the one that quietly redraws what a normal-looking account now looks like.
Who this is for: Compliance Officers and MLROs at Ethiopian banks running trade finance or forex desks.
A retention account that never has to move
Picture a forty-person software outsourcing firm in Addis Ababa, invoicing a European client roughly $80,000 a month. Under the prior directive, a portion of that inflow eventually had to convert to birr, which meant the account never sat still for long and the conversions themselves generated a paper trail a bank could read at a glance. Under FXD/04/2026 nothing has to convert. The balance can simply accumulate, month after month, for as long as the exporter chooses to leave it there.
That is a genuine benefit for a growing exporter: it lets a firm plan capital purchases, hedge future liabilities, or simply hold working capital in the currency its costs are increasingly denominated in. It also means a bank's trade or forex desk is now watching a different kind of account than the one it built its monitoring habits around. An account that used to force small, frequent, easily explained movements can now sit quiet for a year and then move all at once.
Liberalisation is not an AML exemption
Nothing in FXD/04/2026 touches Ethiopia's anti-money-laundering and countering-financing-of-terrorism obligations. Those sit in a separate legal framework, enforced through NBE's own directives to reporting institutions and overseen by Ethiopia's Financial Intelligence Center, and they apply to a retention account exactly as they apply to any other. A dollar that no longer has to convert is not a dollar that stops needing a plausible, documented source. If anything, the account shape this directive creates, long periods of stillness followed by a single large release, is one banks have less practice reading, precisely because periodic conversion used to do some of that filtering automatically.
The balance that finally moves
Consider a boutique consultancy that opened its retention account eighteen months ago. The balance has grown steadily to $650,000 from monthly payments by two clients named on file. Then a transfer request lands: $600,000, destined for an account in a jurisdiction that appears nowhere in the client relationships the bank holds on record.
That single fact does not make the transfer suspicious. It might be the owner paying an overseas supplier for equipment, settling a subcontractor, or moving funds ahead of an acquisition the client contracts never had reason to mention. It might also be exactly the kind of layering step an STR is built to catch. The judgement call is the same discipline compliance teams already apply when a frontline flag turns into a filing decision, which we set out in more detail in six transaction red flags your frontline staff keep missing: does the pattern of inflows match the contracts on file, does the stated purpose of the outbound payment hold up against what the business actually does, and is the destination consistent with counterparties the exporter has already disclosed. None of those questions get easier just because the underlying dollars were never forced through a conversion.
Building the file before the balance grows
The practical answer is to gather the evidence early, while the account is still small and the relationship is still new, rather than reconstructing it under time pressure once a large transfer request is sitting in the queue.
- Underlying service contracts or purchase orders naming the paying client, refreshed as new clients are added
- Invoices that reconcile, in both timing and amount, to the inflows actually credited to the account
- Business registration and TIN details, revisited periodically rather than checked once at onboarding
- A documented business rationale for any outbound transfer that falls outside the client relationships already on file, captured before the payment is released rather than after
- Beneficial ownership information for any exporter that is not a sole proprietorship, a detail that first-generation BPO and consultancy structures do not always volunteer unprompted
What changes for the exporters, not just the banks
A meaningful share of this segment is boutique and first-generation: a five-person design studio, a two-year-old outsourcing shop, a family-run tour operator now taking payment in dollars from international travel platforms. Few have been through an audit, and fewer still expect their bank to ask questions about money the bank itself just told them they no longer need to convert. Read a due-diligence request as friction and the relationship gets adversarial fast; read it as routine and it clears in a day. Banks that explain, plainly and in advance, what documentation a growing retention account will eventually need, save themselves the awkward conversation later, and give the exporter a reason to keep the file current on their own initiative. The same shift toward demonstrable, standing readiness is what we described when looking at how foreign bank entry under Proclamation No. 1360/2024 is raising the governance bar for incumbents generally.
None of this argues against the reform. Indefinite retention is exactly what a maturing service-export sector needs to plan, hedge and reinvest with. It does argue for treating source-of-funds discipline as a standing capability rather than a habit that periodic conversion used to half-automate. DaraCorp's AML & CFT course builds that judgement into a trade or forex desk's daily decisions, and it pairs naturally with Risk Management & Compliance for the wider monitoring framework a growing retention-account book increasingly needs.
This article describes how banks and exporters are adapting to Directive No. FXD/04/2026 and is not legal advice or a definitive interpretation of the directive. Confirm your specific due-diligence and reporting obligations against the primary source at nbe.gov.et and Ethiopia's AML/CFT framework, and take professional advice on your institution's particular circumstances.