Olugbenga Agboola, co-founder and CEO of Flutterwave. FILE PHOTO | POOL

Because the world toasted Nigeria’s Olugbenga Agboola as Africa’s freshly minted tech billionaire, Kenyan authorities had been investigating his agency for potential cash laundering hyperlinks.

It was February final yr when a agency he co-founded — Flutterwave — was valued at $3 billion, making it essentially the most priceless start-up in Africa as worldwide buyers wager on the continent’s fintech scene.

Whereas this made the 37-year-old Agboola one among Africa’s most well-known entrepreneurs, investigators and regulators in Kenya suspected his Nigerian funds firm was driving on proceeds of crime, particularly card fraud.

Ultimately, the Excessive Courtroom froze its Sh6.2 billion unfold in 62 financial institution accounts on cash laundering fears and the Central Financial institution of Kenya (CBK) ordered Kenyan banks to instantly lower hyperlinks with Flutterwave.

Flutterwave was one of many three Nigerian fintech that had been on the centre of a posh cash laundering probe in Kenya, with court docket information indicating that they wired over Sh276 billion in a number of currencies over 4 years with out the information and license from the CBK.

The three, together with RemX and Kandon Applied sciences, had been investigated by the Belongings Restoration Company (ARA) on fears of card fraud and cash laundering.

ARA reckons that the three companies wired Sh276 billion in foreign currency in over 100 accounts at Warranty Belief Financial institution, Fairness, EcoBank, Entry Financial institution and UBA between January 2019 and June final yr.

By the point native investigators acquired court docket orders to freeze the accounts, an estimated Sh262.4 billion had been wired to offshore financial institution accounts in Dubai, Nigeria and Zambia.

Financial institution statements connected to court docket paperwork revealed a cross-continental operation that moved enormous sums of {dollars} to Kenyan banks and wired them to a number of corporations registered domestically with shared possession and suspect addresses.

To date, Kenyan authorities have withdrawn cash laundering fits in opposition to Kandon and RemX, which is owned by Nehikhare Eghosasere and Demuren Olufemi.

This noticed the Excessive Courtroom carry orders to unfreeze Sh5.6 billion belonging to RemX and Sh16 million beneath Kandon.

Learn: Kenya freezes Sh6.2bn linked to Nigerian start-up Flutterwave

However the CBK stated the companies weren’t licensed to function in Kenya and ordered native banks to dam the three Nigerian fintech from their networks amid their sturdy linkages.

Mr Olufemi is co-founder of Enterprise Backyard Group, a enterprise capital agency working from Lagos.

Enterprise Backyard Group was the primary fund to spend money on Flutterwave in 2018, underlining the hyperlinks between the three companies that additionally exchanged billions of shillings amongst one another.

The money actions concerned the identical corporations and entities registered in almost similar names and in some circumstances owned by the identical people throughout totally different nations, together with Kenya, the US, UAE, Nigeria and Ghana.

Lagos-based Kandon — which additionally has a hub on 400-77 King Avenue West Toronto, Canada —moved an estimated Sh6.7 billion between March 2021 and Might final yr in UBA Financial institution. About Sh6.4 billion and Sh28.2 million had been held in euros and kilos respectively.

RemX acquired Sh84 billion and wired out Sh78 billion, a part of which was used to purchase bitcoins on the US crypto change Binance and native change BitPesa.

Kandon advised the court docket final yr that the billions had been used to settle funds for importers and exporters transferring money throughout borders.

“The corporate has been established domestically to supply bridge financing providers supposed to deal with the quite a few challenges confronted within the SME by way of mid- to short-term financing; that is in step with the general ethos throughout the group of corporations within the different jurisdictions the place it has a presence,” Pauline Uzoamaka, a Kandon director, stated in an affidavit.

ARA believed there was a connection between RemX and Flutterwave, citing outsized quantities of cash the startups transacted amongst one another.

Flutterwave despatched Sh12.4 billion to RemX between 2020 and 2022.

The funds had been principally wired from Flutterwave’s overseas accounts to a RemX fastened account at Fairness Financial institution.

“No supporting paperwork had been supplied to justify the transactions, creating suspicions that the accounts had been used as conduits for cash laundering,” ARA advised the court docket.

Preserved funds

Kandon acquired round Sh2.8 billion ($22.5 million) from RemX between February 1 and March 8, 2022 within the interval that coincided with ARA investigations, which had been later transformed to bitcoins.

“The supply of the preserved funds are from a number of shoppers and suppliers serviced by the applicant whose funds at the moment are caught up in baseless software filed by the first Respondent,” Ms Uzoamaka stated in court docket papers defending the outsized transaction the startup facilitated.

The agency was based in 2019 by Ayowole Ayodele and Ms Uzoamaka.

Between March to Might final yr, Flutterwave wired to Kandon a complete of Sh21 million in tranches of between Sh1.5 million and Sh4 million, all in {dollars}.

In a warning to Flutterwave in July final yr, the CBK cautioned the corporate in opposition to participating in remittance and cost providers with no licence.

The agency alleged in court docket paperwork that it utilized for a licence in 2019.

“CBK has acquired info that Flutterwave has been participating in cost and cash remittance providers with out the requisite authorisation/licence by CBK in contravention of the legislation,” CBK deputy director Matu Mugo stated in a letter to Flutterwave.

The three are usually not listed on the regulator’s web site amongst licensed remittance and cost service suppliers.

Flutterwave, which moved the most important chunk of the funds at Sh184.9 billion in 62 financial institution accounts unfold throughout 5 banks, advised the court docket that they entered into agreements with native lenders and repair suppliers to facilitate the transactions.

Learn: Funds agency Flutterwave raises Sh28bn for acquisitions

Transactions in {dollars} hit Sh111 billion ($892.1 million) whereas it additionally wired funds in native forex amounting to Sh67.4 billion, euros (Sh5.8 billion) and kilos (Sh681.4 million).

“Within the interim, whereas ready for the issuance of applicable licenses, the first Respondent (Flutterwave) partnered with licensed entities reminiscent of Safaricom PLC and industrial banks working to remit funds on its behalf and obtain Visa and Mastercard funds by their digital funds gateways,” stated Flutterwave authorized vice-president David Oluranti.

A Kenyan monetary regulator, who sought anonymity, stated the companies breached native legal guidelines by working for years with out the CBK nod.

“When opening an account with a neighborhood financial institution, as a part of the know your buyer (KYC), the cost service suppliers should current a certificates of incorporation, CBK licences and now we now have included the listing of useful homeowners amongst different paperwork. That’s the legislation,” the regulator stated.

That is an indictment on the Kenyan banks that did enterprise with the three Nigerian companies.

The regulator stated the Monetary Reporting Centre—the company that tracks illicit cash—and the CBK weren’t conscious of the circulation of billions linked to the three Nigerian companies.

Flutterwave, based in 2016, is now the most important funds start-up on the continent.

The Lagos-based firm has processed 200 million transactions price greater than $16 billion in 34 African nations.

It maintains that claims of monetary impropriety in Kenya had been “totally false”.

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