Months after Nigerian investigative journalist David Hundeyin published a story accusing Flutterwave, Africa’s largest fintech and its CEO Gbenga Agboola (GB), of gross malpractice, the payment company is in the news again for the wrong reasons.
Flutterwave has been indicted by a court in Kenya alongside others for money laundering, Kenyan news outlet, The Star, reports.
The report said the High court has frozen 56 bank accounts holding a whopping Sh7 billion suspected to have been laundered by foreign nationals.
Following investigation, Kenya’s Asset Recovery Agency (ARA), told the court that the accounts for seven targeted companies were used as conduits for money laundering in the guise of providing merchant services. The agency said it began investigations after suspicious activities and transactions in the seven companies were flagged on suspicion that they were proceeds of crime. It also said that the fintech was illegally operating in Kenya, because it has no valid license from the Central Bank of Kenya (CBK).
These allegations prompted the court to issue orders freezing Flutterwave’s accounts.
But in response, the fintech denied any of the allegations, describing them as false. The company told TechCrunch that it has records to corroborate the high volume transactions in question, which were facilitated due to its cross border operations. It said it has launched its own investigation into the matter.
“Claims of financial improprieties involving the company in Kenya are entirely false, and we have the records to verify this. We are a financial technology company that maintains the highest regulatory standards in our operations. Our Anti-money laundering practices and operations are regularly audited by one of the Big four firms. We remain proactive in our engagements with regulatory bodies to continue to stay compliant,” the company said.
Flutterwave reached the $3 billion market capitalization milestone last October, after securing new funding – making it the most valuable fintech from Africa with investors scattered across the globe. This latest development unfortunately casts further dirt on Flutterwave’s operations, standing tall against the company’s chances at IPO.
Read the report from The Star below:
The accounts that have been frozen are in USD, British Pound Sterling, EURO and Kenya shillings.
The companies listed are 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.
According to the court documents, Flutterwave was registered on February 23, 2017.
Its directors are listed as Olugbenga Agboola, David Mouko (Kenyan) and Flutterwave Inc.
The company 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.
“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.
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.
The company’s Equity account number revealed that at some point in May 2021, it received 185 online card payments all sharing the same bank identification number.
The transactions were done using cards issued by the same bank at the same point on the same day raising suspicion of card fraud.
For instance, ARA says the Flutterwave equity USD Bank account was opened in November 2020.
The funds received were mainly from Flutterwave Inc.
Between 2020 and 2022, the account received approximately Sh12 billion and the funds were either transferred to Remix ltd while the rest were invested in a fixed deposit account.
Justice Maina further issued orders stopping Boxtrip travels and tours limited from transferring or withdrawing 3.9 million dollars (Sh460 million) held in his Eco bank account
The Director of Boxtrip travels and tours is listed as Enyioma Olufemi a Nigerian national.
“It received the money from Flutterwave ltd in two days. That is 27 to 28 April this year.”
“No explanation nor supporting documents were provided to justify the transactions therefore reasonable grounds to believe that the accounts were used as conduits for money laundering,” said ARA.
For Bagtrip travels, the court froze its account holding Sh425 million shillings.
The director of the company is listed as Taiwo Soyemi, a Nigerian National.
It received the monies from Flutterwave ltd and rainbow solution technology on 28 April and 6 May 2022.
A further Sh1.2 million belonging to Elivalat Fintech Limited was frozen.
Some of the monies were transferred to Tiware Adrian Simon who is one of the directors at Elivalat ltd and to Muoko David who is one of the directors of Flutterwave ltd.
For Aduru technology limited, the court froze Sh100 million held in its Equity account.
The directors of the company are listed as Adaeze Okonkwo, and Caroline Muchina, wife to David Muoko who is a director of Flutterwave.
For Hupesi solutions, the court preserved the Sh1.6 million held in its Equity account.
The proprietor of the company is listed as Festus Mutuku.
The documents indicate that the company’s equity account received a total of Sh143m of which 54 million was transferred to Flutterwave payments, 45 million transferred to GC Natural PL and internal transfers of Sh26 million.
The transactions were done in tranches of below Sh1 million to avoid reporting threshold.
But by the time the agency obtained orders to freeze, only 1.6 million was left in the account.
The court preserved another Sh2.4 million held in the account of Crus ride, a motor vehicle dealer.
The company is said to have received the monies from Flutterwave on June 6. The funds were later transferred to Simon Ngige.
“The account had been dormant and had not received any funds from September 2021 to May 2022. However, in June 2022, the account received 269,000 US dollars (31.7 million shillings),” said ARA.
The documents indicate that Ngige received 452000 US dollars (Sh53.3 million) in his KCB account from Flutterwave, Cavin solutions and Cruz ride auto.
On 24 June, Ngige transferred 200,000 US dollars (SHS 23.6 million) to his KCB account. The court stopped him from transferring Sh14 million left in his account
“An analysis of the statements of accounts established that the accounts received suspicious deposits that indicate smurfing activities hoping to evade detection,” said ARA.
The orders granted by the court will be in force for a period of 90 days.
The case will be mentioned on November 7.
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