State drops Sh6.2bn case against Nigerian fintech

The government has dropped a Sh6.2 billion financial impropriety case against another Nigerian fintech company, Flutterwave which had been linked to money laundering and card fraud.

Money held in 62 bank accounts belonging to Flutterwave and some other firms were frozen by the High Court following an application by the Assets Recovery Agency (ARA) in July last year.

In a consent filed before Justice Esther Maina yesterday, the State said it doesn’t want to pursue the matter and urged the court to adopt the same and have the freezing orders of the firm’s assets lifted.

Following the development, the Judge allowed the ARA’s request to adopt a consent dated December 12 recorded by the parties and marked the case.

The judge vacated the freezing order of the accounts issued last year holding billion of shillings last year.

In the past six months, the Asset Recovery Agency (ARA) has terminated forfeiture suits against  five other Nigerian fintechs and returned their Sh12 billion frozen over suspicion of being proceeds of financial crimes.

The companies had been suspected of being part of an international ring of fraudsters using Kenyan banks as conduits of illicit money whose source cannot be established.

Financial impropriety

A sum of Sh12 billion had been frozen by courts in the financial impropriety suits.

The companies whose cases have been terminated so far and their bank accounts unfrozen include Korapay Technologies Limited ($249,565) equivalent to Sh31,245,538) and Kandon Technologies Limited (Sh15 million).

Others are RemX Capital Limited (Sh787 million), Avalon Offshore Logistics Limited (Sh43.5 million) and OIT Africa Limited (Sh4.9 billion).

ARA had said that the companies’ bank accounts received credits from various foreign suspicious sources and that they conducted hurried withdrawals and transfers before the investigators obtained the preservation orders.

The money belonging to Flutterwave Payments Technology Ltd, a giant financial technology company, was frozen by the court following an application by the ARA on suspicion that the cash was proceeds of crime.

The ARA wanted the money held in various banks in Kenya forfeited to the government. The High Court had issued orders restricting access to the money held in 62 bank accounts belonging to Flutterwave and some other firms over allegations of card fraud and money laundering.

Associate firms

Those from Nigeria include Flutterwave Payment Technology Limited, Boxtrip Travel and Tours Limited, Bagtrip Travels Limited, Elivalat Fintech Limited, Adguru Technology Limited, Hupesi Solutions and Cruz Ride Auto Limited.

ARA had claimed the foreign companies were part of an international ring of fraudsters, who have been using Kenyan banks as conduits of illicit money whose source cannot be established.

The agency said in court filings that the bank accounts received billions of shillings whose source is suspected to be money laundering and card fraud.

Money laundering scheme

“Flutterwave’s bank accounts received millions in US Dollars 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.”

While seeking to have the funds forfeited to the government, the ARA informed the court 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.

Further, 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.