Central Bank of Kenya orders banks to close accounts of Flutterwave, Chipper Cash
The Central Bank of Kenya (CBK) has ordered commercial and microfinance banks in the East African to desist from doing business with Flutterwave and Chipper Cash.
In a letter sent out yesterday by the CBK, the chief executives of the affected banks were ordered to close all accounts linked to the fintech unicorns and freeze the cash in them. They are also to report their compliance within seven days.
“It has come to the attention of the Central Bank of Kenya (CBK) that Flutterwave Payments Technology Ltd and Chipper Technologies Ltd have been engaging in the money remittance business without licensing and authorisation by CBK. Money remittance services in Kenya are regulated pursuant to the Central Bank of Kenya Act and the Money Remittance Regulations, 2013. Further, money payment services in Kenya are regulated pursuant to the National Payment System Act and the National Payment System Regulations, 2014,” said part of the letter as seen by Business Daily.
Recall that the CBK’s Governor Patrick Ngoroje had earlier warned that Flutterwave and Chipper Cash were not licensed to operate remittance services in the East African country.
In the meantime, Flutterwave has reacted to the development in Kenya, telling Tech Cable in an email that it initially entered the Kenyan market through partnerships with local lenders. As its operation grew, the company said it then applied for a payment service provider licence. An approval to said licence application is still pending.
Flutterwave’s troubles in the East African country began earlier this year when the Assets Recovery Agency of Kenya obtained a court order freezing some bank accounts operated by fintech firm.
Business Insider Africa reported that the Kenyan agency suspected that the $52.5 million in the bank accounts were proceeds of fraud. The agency is now working to have the funds forfeited to the government.
But Flutterwave has vehemently denied this allegation, describing it as a smear campaign. The company also explained that it uses its financial partners to receive funds and make payments on behalf of merchants and corporates.
