Flutterwave accused of Money Laundering In Kenya

Months after an exposé that alleged insider trading and abuse at Africa's biggest unicorn, Flutterwave, the startup is once again embroiled in news that calls into question the legitimacy of its operations. 

Flutterwave 

Yesterday, Kenya's Asset Recovery Agency (ARA) got a court order to freeze 56 bank accounts which 7 companies had used to launder Ksh7 billion (~ $59.2 million). 

The companies include Boxtrip Travel and Tours Limited, Bagtrip Travel Limited, Elivalat Fintech Limited, Adguru Technology Limited, Hupesi Solutions, Cruz Ride Auto Limited, Simon Ngige (an individual), and Flutterwave. 

According to The Star, the ARA received court orders in April, days before the initial exposé was published, to search and inspect Flutterwave's 52 Kenyan bank accounts—29 with Guaranty Trust Bank, 17 with Equity Bank, and 6 with Ecobank, all holding about Ksh 7 billion.

Months later, its results showed that there were suspicious funding transactions within the accounts. "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. 

No Authorization and evidence of merchant services

A more damning claim by the ARA is that Flutterwave is operating a payment service platform without authorisation from the central bank of Kenya (CBK). The Agency also claims there's little to no record of transactions from customers paying for goods and 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,” said Isaac Nakitare, an investigator with the ARA. 

Apparently, most of the monies received in Flutterwave's Kenyan accounts include "suspicious deposits that indicate smurfing activities hoping to evade detection".

Boxtrip Travels, Bagtrip Travels, Elivalat Ltd—all with Nigerian nationals as directors—all received millions of dollars from Flutterwave, amounts sent within short periods of time. 

"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 the ARA. 

The ARA's court order allows the Agency to freeze the bank accounts for 90 days while its case against Flutterwave will be mentioned in court later in November. This news comes weeks after Flutterwave made 2 significant changes to its C-Suite, hiring ex-Goldman Sachs managing director as its CTO, and former American Express VP Oneal Bhambani as its CFO.