This is definitely not the best time for Flutterwave, Nigeria and indeed Africa’s most capitalised financial technology startup.
On Wednesday, a high court in Kenya directed that all bank accounts belonging to Flutterwave and other companies linked to money laundering be frozen.
The decision was after Kenyan Asset Recovery Agency (ARA) told the court that the accounts were used as conduits for money laundering and not for merchant services claimed.
“Investigations established that the bank accounts operations had suspicious activities where funds could be received from specific foreign entities which raised suspicion. The funds were then transferred to related accounts as opposed to settlement to merchants,” said the Agency.
The companies affected were Flutterwave payment technology limited, Boxtrip travel and tours limited, Bagtrip travel limited, Elivalat fintech limited, Adguru technology limited, Hupesi solutions, Cruz ride auto limited and one Simon Ngige.
The court documents showed Flutterwave was registered on February 23, 2017 in Kenya. Its directors were listed as Olugbenga Agboola, David Mouko (Kenyan) and Flutterwave Inc.
Flutterwave operated 29 bank accounts with Guaranty Trust Bank, 17 with Equity Bank and 6 with Ecobank.
The Agency says the company’s account received billions of shillings and the same was deposited in different bank accounts in an attempt to conceal the nature, source or movement of the funds.
In an affidavit, Isaac Nakitare, an investigator with the agency says they obtained orders on April 4 this year to search and inspect the accounts.
Nakitare says by the time he obtained the orders, the accounts at Guaranty Trust bank belonging to Flutterwave had a balance of Sh5.3 billion, Sh1.4 billion at Equity bank and other millions at Ecobank.
Some of the funds he said were transferred into fixed deposit accounts.
The Agency further established that Flutterwave was concealing the nature of its business by allegedly providing a payment service platform without authorization from the central bank of Kenya as required by section 12 of the national payment system act.
The accounts he said were used as conduits for money laundering in the guise of providing merchant services.
“If indeed the Flutterwave was providing merchant services, there was no evidence of retail transactions from customers paying for goods and services. Further, there is no evidence of settlements to the alleged merchants,” he said.
Flutterwave Denies Any Wrongdoing
On Thursday, Fluttwave denied any wrongdoing and described claims of financial improprieties involving the company’s operations in Kenya as false.
In a statement released by Wendy, the company’s head of communication, Flutterwave said it receives payment through its various financial institution partners and makes those payments on behalf of merchants and corporate entities on its platforms.
The statement reads, “Claims of financial improprieties involving the company in Kenya are entirely false, and we have the records to verify this.
“Through our financial institution partners, we collect and pay on behalf of merchants and corporate entities. In the process we earn our fees through a transaction charge, records of which are available and can be verified. As a business, we hold corporate funds to support our operations and provide services to all our customers.
“By facilitating payments for the biggest organizations in the world and everyday businesses, we process significantly large volumes of money and contribute to growing the economy in Kenya, and the rest of Africa.
“We are a financial technology company that maintains the highest regulatory standards in our operations. Our Anti-money laundering (AML) practices and operations are regularly audited by one of the big 4 firms. We remain proactive in our engagements with regulatory bodies to continue to stay compliant.
“Flutterwave has a responsibility to ensure the integrity of the ecosystem, and we pledge our commitment to continue to work with all stakeholders to uphold this. We are working to figure out the motive behind the publication, and have the records straightened.”
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