Nigerian fintech, Flutterwave has been cleared of money laundering allegations levelled against it by the Kenyan Asset Recovery Agency (ARA) seven months ago, which included the freezing of about $56.7 million in the company's account.
Per Bloomberg, the withdrawal of the charges against the fintech unicorn was verified by Robert Gitau, a lawyer representing Flutterwave. "We are pleased to have this matter resolved so we can resume our work with our strategic partners in Kenya, providing innovative payment solutions to companies and individuals in
one of Africa's largest and most dynamic economies," Flutterwave Founder and CEO, Olugbenga Agboola, said in a statement shared with Benjamindada.com.
Several scandals rocked Flutterwave in 2022, including this allegation by ARA. At the time, the local regulator stated that its "investigations established that [Flutterwave's] 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".
ARA also said that Flutterwave is operating a payment service platform without authorisation. The Central Bank of Kenya confirmed this allegation in July 2022, when its Governor said that "Flutterwave is not licensed to operate as a remittance provider or...as a payment service provider in Kenya". Within the same period, CBK through the Deputy Director of Bank Supervision, Matu Mugo instructed CEOs of financial institutions in Kenya to "cease and desist from dealing with Flutterwave".
Related Article: How Flutterwave expanded into Kenya
"We have been in constant engagement with the Central Bank of Kenya to ensure that we provide all the requirements and we look forward to receiving our license," Flutterwave said in a statement. In 2019, the fintech company reportedly submitted applications for a Payment Service Provider license.
Amidst the fraud allegations, Flutterwave maintained that ARA's claims of financial improprieties were false.
"We take corporate governance and transparency very seriously at Flutterwave," Cathy Kinyua, Flutterwave's Regional Expansions and Partnerships Manager, East Africa, said. "This update should reassure our partners and stakeholders across the continent that we have complied with all regulations and laws in Kenya, as well as all other markets where we operate."
Flutterwave has instituted a number of changes over the past year to ensure all internal governance structures are best-in-class. It has continued to take steps to strengthen its risk and governance and recently hired Emmanuel Efenure from Mastercard, as VP and Head of Risk for Africa.
These steps are in addition to existing arrangements with the Big four companies that support independent internal audit programs in support of the efforts done internally by the Flutterwave team. All company policies are subject to annual reviews conducted by third-party audit firms in the areas of AML/CFT, data privacy, information security, and finance.
"Politically motivated" allegations?
In an interview with People Gazette, Agboola further alleged that the claims were "politically motivated". "Why are Nigerian companies in Kenya being targeted by Kenya ARA?" he said. "This is happening near their election time." At the time, media reports speculated that ARA's allegations against Flutterwave and other Nigerian fintechs were due to the relationship of Alexander Ezenagu, the son-in-law of the then Vice President, Williams Ruto—who later won the Kenya presidential elections in August 2022—and these accused companies.
"If Ruto wins the Kenyan election which is looking likely, the court case against a certain Fintech company will coincidentally disappear from the priority list or get quietly dropped altogether," David Hundeyin, a Nigerian journalist, tweeted in August 2022 citing the aforementioned relationship.
Flutterwave declined to comment on this subject.
Valued at $3 billion in its last funding round, Flutterwave's plans for an IPO were stalled due to regulatory issues and other scandals including insider trading and sexual allegations.
The company has since hired high-profiled professionals to manage its finances, technologies and people's operations, which some analysts have said that it is important in preventing the further escalation of previous scandals.
Although Flutterwave believes that "public market investors will value the company’s growth, market-leading position, and marquee customer base at a premium to our private funding valuations," it will continue to "fund operations through existing cash or through private capital," according to TechCabal.
Recently, several local and foreign media—including Benjamindada.com, reported that Flutterwave is vying to acquire Railsr, a UK-based fintech company that is plunged into a leadership and financial crisis. This comes almost a year after the African payment unicorn co-led a $3.4 million seed investment into Dapio, another UK-based fintech.
- This is a developing story, it will be updated with more details.
- This article was updated with a comment from Flutterwave CEO and East Africa expansion lead (Feb. 9, 2023).