On July 6, 2022, it was announced that 56 accounts were frozen by a Kenyan high court. Most of the accounts frozen mainly belonged to Nigerian fintech juggernaut, Flutterwave over the suspicion of money laundering conducts.
Assest Recovery Agency of Kenya (ARA) carried out the operations on these accounts that had the sum of Ksh 7 billion ($59 million).
Flutterwave, has been one of the major companies that have had controversies shadowing it in the past but now it seems to share the spotlight with other Nigerian fintech accused of money laundering.
The ARA alleged that both companies siphoned up to $6 billion with the suspicious movement of funds. It also stated that both companies were linked to Flutterwave and the related companies it accused of money laundering.
The ARA said that both companies moved funds in an erroneous manner, siphoning up to $6 billion. It was also stated that both Nigerian fintech companies had a connection with Flutterwave and the affiliated businesses it is accusing of money laundering.
What the Nigerian fintech companies are saying?
The allegations of the ARA have been explicitly refuted by Flutterwave and Korapay in their respective public statements. While Flutterwave said that the accusations were untrue, it made no further mention of the situation’s true facts.
On the other hand, Korapay clarified that the relevant frozen money were a requirement for obtaining a payments processing license in Kenya.
“We want to make very clear that the allegations from Kenya and the report from Standard KE are baseless and bordering on malicious,” Korapay said
However, the problems are serious, and Kenya has previously blacklisted several Nigerian businesses. The Kenyan government has so far placed a freeze on billions of dollars in funds that belonged to Nigerian businesses.
What Kandon is saying
In a statement Kandon representative disputed all claims of financial irregularity and stated that the company will take all required legal action.
“Every transaction we did in Kenya was fully compliant, we’re working directly with the banks who have carried out KYC on us and are aware of the nature of our transactions and our beneficiaries,
This is an issue that has been ongoing for a while, we have been aware of this issue for months and we’re definitely taking legal actions. I believe we are going to be cleared because we have done nothing wrong, it feels like witch hunting,” the representative said.
More about the two Nigerian fintech companies
In 2017, Dickson Nsofor and Bryan Uyanwune launched the payment company Korapay. The firm is a Techstars sponsored company.
Its headquarters is in Canada while its main market is in Nigeria. Recently the company expressed its plans for expansions in Kenya and South Africa after successfully doing the same in the UK last month.
The business raised a pre-seed of $120,000 in February 2019 and an undisclosed seed in September of that same year.
Kandon, on the other hand, was launched by Ayodele Ayowole in 2019. Kandon is a liquidity management startup that is also backed by Techstars.
It was registered in Canada two years ago, and its Kenyan subsidiary was launched in February last year.
More on the investigations
The court’s decision to impose a six-month account freeze on the two Nigerian fintech companies, Korapay and Kandon’s accounts is likely to help ARA finish its investigations into the alleged money laundering.
According to the evidence presented to the court by ARA, Korapay and Kandon were part of a global network of fraudsters who channeled illegal funds through Kenyan banks.
These Nigerian businesses have also been dubbed “shell firms” by the agency since they were set up in Kenya to use the country’s loosely regulated financial system to launder illegal money.