Kenyan banks instructed to close accounts belonging to Flutterwave and Chipper Cash
The central bank of Kenya last week issued a directive to banking institutions in Kenya to shut down all accounts belonging to payment technology Flutterwave and Chipper Cash. This directive will also include freezing the cash from these payment technologies. The lending institutions have been given a time limit of seven days to report back to the Central Bank of Kenya.
What are Flutterwave and chipper cash?
Flutterwave is a unicorn Start-up Company that facilitates cross-border payments transaction in Africa via one API. It now operates in 34 countries in the African continent.
It is owned by three Nigerians Olugbenga Agboola, Adeleke Christopher, and Iynoluwa Samuel. The company is registered in San Francisco United States. Chipper cash is also a cross-border Payment Company, currently operating in 7 African countries.
Why did the CBK take this strong action?
The CBK governor told the media the two firms are not licensed to provide remittance and payment services in the country. Flutterwave is currently being investigated by the Asset Recovery Authority [ARA] for money laundering.
Last week’s directive will be another huge blow to the payment technology startups’ expansion into the country. The two unicorn startups have been among the leaders of the growing multibillion shilling online payment industry.
Kenya steps up fight against dirty cash inflows
It was only earlier this month when the high court of Kenya froze more than sh 6.2 billion deposited in 62 bank accounts due to allegations they were used for card fraud and money laundering.
The accounts which were deposited in various banks like Guaranty Trust Bank [GTB], Equity bank, Eco bank, Kenya Commercial Bank [KCB], and Co-operative Bank accounts were frozen after the application to block the transfer or withdrawal, awaiting the presentation of a petition to have the money forfeited to the government.
Other accounts frozen included, Boxtrip Travels and tours [sh 467.1million ], Bagtrip Travels Ltd[ sh 436 million], Elivalat Fintech Ltd[ sh 1.16 million],Hupesi solutions[ sh 1.6 million], Cruz Ride Auto Ltd[ sh 2.4 million] and another account belonging to Simon Karanja Ngige, has sh 14 million.
ARA Investigation
According to the investigation done by Asset Recovery Agency [ARA], these payments were done using cards issued by the same bank, at the same point, on the same day, raising suspicion of card fraud.
ARA believes the money was deposited to Kenyan bank accounts owned by Flutterwave from different countries abroad, then transferred to six companies. This raised suspicion over the source of the cash sent to Flutterwave.
The payment company received a total of sh12.4 billion between November 2020 and this year. This large sum of money was deposited in just one account opened through Equity bank.
Flutterwave has come out and defended itself claiming its website provides legitimate payment technology for merchants and processes payments on the Web, mobiles, ATM , and point of sales worldwide.
