Flutterwave has come out to deny the fraud and money laundering claims leveled against it by Kenya’s Asset Recovery Agency, which investigates and recovers proceeds of crime.
This is after a total of $52.5 million in 62 accounts linked to Flutterwave and six other companies that are recipients of wire transfers from the fintech were blocked by the country’s pinnacle court, after the agency applied to have them frozen.
In court filings seen by TechCrunch, the agency said it began investigations after suspicious activities and transactions in the six companies were flagged on suspicion that they were proceeds of crime. The agency also said that the fintech was operating in Kenya without a valid license from the country’s monetary regulator, the Central Bank of Kenya (CBK).
Flutterwave says the allegations are false.
“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,” said Flutterwave in a statement shared with TechCrunch.
The ARA alleges that the funds in Flutterwave’s accounts were received from specific foreign entities and transferred to specific accounts belonging to the six companies instead of as settlement to merchants.
It said that Flutterwave’s bank accounts were used as conduits for money laundering under the guise of providing merchant services, and that the fintech had no evidence of retail transactions from customers paying for goods and services. It added that there was no evidence of settlements to the alleged merchants. The agency has petitioned the court to have the money forfeited to the government.
“That the 1st Respondent’s (Flutterwave) bank accounts received billions (millions in USD) in a suspected scheme of money laundering and the same deposited in different bank accounts in an attempt to conceal or disguise the nature, source, location, disposition or movement of the said funds,” said ARA.
ARA also said that Flutterwave was suspected of card fraud as some “transactions were done using cards issued by the same bank, at the same point, on the same day, raising suspicion of card fraud.”
But Flutterwave told TechCrunch that it processes payments for businesses world over, most of which are in large volumes. It said it has records to corroborate these transactions. Flutterwave facilitates cross-border payment transactions of small to large businesses in Africa via one API, and also helps businesses outside the continent expand their operations in Africa. Its list of clientele includes Booking.com, Flywire and Uber. The startup recently raised $250 million at $3 billion valuation, making it one of Africa’s highest-valued fintechs.
“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,” said Flutterwave.
“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,” it said.
Elivalat Fintech Ltd, Hupesi Solutions, Cruz Ride Auto Ltd and accounts of its director Simon Karanja Ngige, Boxtrip Travels and Tours, Bagtrip Travels Ltd accounts, and Adguru are the entities said to have received the funds from Flutterwave, and whose accounts were also frozen.
Fluttewave alleged a witch-hunt saying that it is conducting its own investigations to uncover the motive.
“Flutterwave has a responsibility to ensure the integrity of the ecosystem, and we pledge our commitment to continue working with all stakeholders to uphold this. We are working to ascertain the motive behind the false claims, and have the records straightened.”