Kenyan Authorities Freeze Flutterwave’s 56 accounts

Kenya's Asset Recovery Agency (ARA) received a court order to freeze 56 bank accounts on Wednesday. These accounts were used by 7 firms to launder Ksh7 billion ($59.2 million).

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

Shortly before the original exposé was released, The Star claims that the ARA was given court orders in April to search and examine Flutterwave's 52 Kenyan bank accounts—29 Guaranty Trust Bank accounts, 17 Equity Bank accounts, and 6 Ecobank accounts. The accounts in question have money in dollars, pound sterling, euros, and Kenya shillings, with a cumulative amount of Sh7 billion that is thought to be the result of foreign persons laundering money.

The ARA informed the court that the accounts of the targeted businesses were being utilized as channels for financial fraud under the guise of offering commercial services, leading to the issuance of the orders, which would be in place for 90 days.

Olugbenga Agboola and David Mouko, a Kenyan, served as directors when Flutterwave was formed on February 23, 2017, per court filings.

In an effort to hide the type, source, or movement of the transactions, the company's account allegedly received billions of shillings and transferred them into various bank accounts.

“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.

Investigations revealed that the bank transaction had irregularities, including the potential for receiving money from particular foreign companies that sparked suspicion. Instead of paying out to merchants, the money was then moved to associated accounts.

By offering a payment service platform without the authorization from the Central Bank of Kenya (CBK), as required by the payment system statute, Flutterwave, according to the Agency, was hiding the nature of its company. It further asserts that there is little to no documentation of client payments for goods and services.

There was no proof of retail transactions by customers paying for products and services, even if the Flutterwave was in fact offering merchant services. Furthermore, according to ARA investigator Isaac Nakitare, there is no proof that payments have been made to the claimed merchants. He alleged that the majority of the funds deposited into Flutterwave's Kenyan accounts comprise shady transactions that point to smurfing activities intended to avoid detection.

“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,” the investigator said.

Nakitare stated in an affidavit that on April 4, the team received orders to search and examine the company's accounts in order to create a money laundering case. He revealed that at the time he received the orders, Flutterwave's accounts at Guaranty Trust Bank had a balance of Sh5.3 billion and one held at Equity Bank had a balance of Sh1.4 billion.

Later in November, the legal proceeding against Flutterwave will be brought up in court. This information comes shortly after Flutterwave hired Oneal Bhambani, a former VP at American Express, as its CFO and a former managing director at Goldman Sachs, as its CTO.