The real estate sector is hardly vulnerable for money laundering and criminal abuse. Real as it can be traded in order to hide the origin of illicit funds on a non-transparent and speculative market, or they can be used as a final investment, where criminals park their money in business or houses permanently. Given this nature of the sector peoples have been historically trying to launder their dirty money by purchasing real estates. By the same token, in Ethiopia there is rampant problem of money laundering problem in the real estate sector. This is further complicated due to absence of regulation in the sector and the contemporary booming of money laundering in the sector and loosen compliance practices on part of the reporting entities. Based on this problem the study aims to assess regulatory and practical problems of AML Anti-money Laundering regime in Ethiopia affecting compliance practice of real estate agents to the Anti-money Laundering. For that, the research adopts a non-doctrinal research design using a mixed (socio-legal) research approach. The research uses purposive sampling and collect data via semi structured research questions to the concerned respondents. The result indicates that the Ethiopian Anti money Laundering regime is ineffective with regard to regulating money laundering practices in the real estate sector and the real estate agents as a reporting entity are not effectively to Anti-money Laundering requirements. This is basically attributable to limited implementation of the rules, gaps with regard to information flow and coordination both at domestic and cross-border level, problems with regard to operational independence of Financial Intelligence Center and other concerned authorities and most critically limitation on the standard operating procedures. Based on these findings the researcher recommends adoption of effective control and supervision, enhanced regulatory and legislative responses to the sector, Capacity building, Cooperation and collaboration and Enhancing the data sharing trends