CBK orders banks to close Flutterwave and Chipper Cash accounts
The Central Bank of Kenya (CBK) has ordered banks and microfinance institutions to seize payment technology companies Flutterwave and Chipper Cash.
In a letter to chief executives, the regulator ordered banks to end ties with fast-growing payment unicorns, which could mean closing all accounts and freezing money. Lenders must report to the CBK within seven days.
This comes days after the CBK governor told reporters at the Monetary Policy Committee (MPC) meeting that the two companies were not allowed to provide remittance and payment services in the country. .
“It has come to the attention of the Central Bank of Kenya (CBK) that Flutterwave Payments Technology Ltd and Chipper Technologies Ltd have engaged in the money transfer business without a license or authorization from the CBK,” the letter reads. .
“Money transfer services in Kenya are regulated under the Central Bank of Kenya Act and the Money Transfer Regulations 2013. Further, payment services in Kenya are regulated under the Central Bank of Kenya Act National Payments System and the National Payments System Regulations 2014.”
The directive could spell the end of the expansion of payment technology startups in the country, seeking to tap into the fast-growing multi-billion shilling online payment industry.
The two unicorns, with backing from wealthy Western investors, have grown rapidly across the continent in recent years much to the chagrin of regulators accusing them of increasing fraud and moving illicit money with lax requirements.
Flutterwave is currently at the center of a complex money laundering investigation by the Assets Recovery Authority (ARA), and it is unclear whether the company has regulatory clearances to operate in the country.
The High Court earlier this month froze more than 6.2 billion shillings spread across 62 bank accounts belonging to the Nigerian start-up and four Kenyans, fearing they were the proceeds of fraud. card and money laundering.
Lily: Nigerian tech firm at heart of Kenya’s 6.2 billion shillings money laundering smuggling
Billions in the accounts of Guaranty Trust Bank (GTB), Equity, EcoBank, KCB and Co-operative Bank were frozen after the ARA asked to block the transfer or withdrawal, pending the deposit of a motion to confiscate the money from the government.
The payment technology company was founded in 2018 by Olugbenga Agboola and Iyinoluwa Aboyeji and has offices in Lagos, Nigeria and at 1323 Columbus Avenue, San Francisco, USA.
Kenya is the company’s second largest market after Nigeria.
In February, the company raised 28.41 billion shillings in a Series D fundraising, primarily to fund mergers and acquisitions in the growing payments market on the mainland.
Chipper Cash was founded in 2018 by Ugandan Ham Serunjogi and Ghanaian Maijid Moujaled to offer instant cross-border mobile money transfers in Africa.
The company is headquartered in San Francisco, California, United States, and has raised over 35.9 billion shillings ($302.2 million) in funding, the latest being a Series C in November of l ‘last year.
The peer-to-peer payment services platform operates in nine countries including Ghana, Uganda, Tanzania, Rwanda, Nigeria, South Africa and Kenya. The others are the United States and the United Kingdom.