Flutterwave Inc., the embattled Nigerian fintech, shifted the focus back to the Central Bank of Kenya (CBK) after revealing that it applied for a license with the banking sector regulator in 2019, three years before its current predicament. The firm drew the wrath of the CBK last week after it was revealed that it had been operating in Kenya without a permit, reigniting the debate over the licensing nightmare for fintech.
Last week, the CBK ordered banks and microfinance institutions to stop doing business with Flutterwave and Chipper Cash, another money transfer service provider.
Kenya is the firm’s second-largest market after Nigeria, and the revelation that it operated without a license is likely to cast doubt on financial technology regulation.
“As our operations expanded in 2019, Flutterwave submitted its application for a payment service provider license, we have been in constant contact with the Central Bank of Kenya to ensure that we meet all of the requirements, and we eagerly await our license.” – Flutterwave Inc,.
The Assets Recovery Authority is conducting a complex money-laundering investigation into Flutterwave. Until now, it was unclear whether the company had regulatory approval to operate in Kenya.
CBK Directed Lender to Cut Ties with Flutterwave.
Last week, the banking regulator directed lenders to cut ties with the fast-growing payments unicorns, which could mean closing all accounts and freezing the cash. The lenders were also told to provide a report of the dealings with the two money transfer services to the CBK within seven days.
“It has come to the attention of the Central Bank of Kenya that Flutterwave Payments Technology and Chipper Technologies have been engaged in the money remittance business without CBK licensing and authorization,” the letter stated in part.
“Kenyan money remittance services are governed by the Central Bank of Kenya Act and the Money Remittance Regulations, 2013. In addition, money transfer services in Kenya are governed by the National Payment System Act and the National Payment System Regulations, 2014.”
Flutterwave raised Kes 28.41 billion in February to fund mergers and acquisitions in the continent’s growing payments market, including Kenya.
“We recognize and respect the Central Bank of Kenya’s responsibility to protect the payments ecosystem, and we support the ongoing collaboration between regulators and fintech to foster innovation in the financial services industry, like many other financial technology service providers in Kenya, we entered the market through partnerships with Central Bank of Kenya-licensed banks and mobile network operators.” – Fluttwave Inc.,
On suspicion of card fraud and money laundering, the High Court froze more than Kes 6.2 billion in 62 bank accounts belonging to the Nigerian start-up and four Kenyans early last month.
