Kenya’s ARA drops laundering charges against Nigerian fintech companies, Korapay, Kandon

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“I would like to confirm that the allegations of money laundering and card fraud made against Korapay Technologies Limited and Kandon Technologies were not established,” – Mike Muia, director, criminal investigations
Korapay

The Asset Recovery Agency of Kenya has withdrawn its case against Korapay, the payment solutions company it levied money laundering and card fraud accusations against in July. Documents seen by Technext show that the agency withdrew its application last week.

This comes after the National Police in Kenya finalised its months-long investigation into the matter. Mike Muia, the director, of criminal investigations in the Kenyan police, said in a notice that its “investigations are now finalised.”

Similarly, the police also said that it had finalised its investigation into money laundering and card fraud allegations the ARA also made against Kandon Technologies Limited, another Nigerian fintech company.

“I would like to confirm that the allegations of money laundering and card fraud made against Korapay Technologies Limited and Kandon Technologies were not established,” Muia said in the notice.

The ARA had accused Kandon of foreign laundering totalling Sh45 million ($381,065.29).

Korapay
A letter received from the ARA as seen by Technext

Read also: Nigerian Fintech company, Korapay denies money laundering claims in Kenya, heads to court

A litany of money laundry charges

When the ARA announced money laundering charges against the fintech company, it said that it had observed transactions which raised suspicion: “We established that they received the Sh29.5 million in a single transaction which raised suspicion as to the source of the funds,” the agency said.

At that time, Justice Esther Maina of Kenya had issued an order at the time that Korapay Technologies Limited’s Equity Bank account with $249,990 (Sh29.5 million) be frozen.

The ARA had also accused similar fintech companies with Nigerian founders that had sought to operate in Kenya of money laundering. Flutterwave and ChipperCash were accused earlier this year and their accounts in the country were frozen.

The ripple effect had led to a cascade of bad PR for the Nigerian tech ecosystem, raising distrust for Nigerian players looking to manage global businesses with Africa as a starting point.

Other top monetary regulators had begun to look into the activities of Nigerian fintech companies in their countries. The Bank of Ghana announced at the time that it was going to conduct a wide-ranging review of all the activities of Flutterwave in the country.

“The Bank of Ghana is conducting a review on Flutterwave Technology Solutions Limited as part of its continuous surveillance of the financial system,” Ismail Adam, the Head of Bank Supervision at the ghana apex bank said.

Read also: Flutterwave refutes money laundering accusations

But, Korapay had maintained its innocent. The company claimed that the said transactions were part of a process stipulated by the Central Bank of Kenya for securing a payment service provider and remittance operator licenses.

“As part of the capital requirements from the CBK for obtaining a payment service provider and remittance operator license, Kora deposited the sum of $250,000 in its freshly opened bank account. In line with CBK requirements”

– Gbenga Onalaja, the head of marketing at Korapay said in a medium post.

Korapay had said that it will challenge the allegations in court, adding that it has documents to support its denial of the accusations.

KoraPay calls money laundering allegations "borderline malicious"
Korapay calls money laundering allegations “borderline malicious”

“As a responsible corporate citizen, we have consistently challenged all these allegations in court and will continue to do so; we have documents that support our position. We are confident that the Kenyan courts will come to see that the accusations against us are not only wholly baseless but borderline malicious,” a statement from Korapay read.

This development comes as the company shifts from offering B2C products to only B2B products to its customers. Korapay had been on an expansionist project and had set up shop in the UK.

“We saw a bigger problem around how money moves within Africa and we have since evolved into a payment infrastructure, allowing both local and global businesses to process payments in and out of Africa,” one of its co-founders, Gideon Oghenetega Orowiroro said about the shift towards B2B products.

Beyond Korapay, ARA is retracing on many fronts

When the ARA started its account-freezing spree, some observers attempted to link the event to the heated presidential election campaigns in Kenya.

Now, that the elections are over and then Vice-President, William Ruto has been sworn in as President, it seems that the dust is gradually settling.

Recall that last month that the ARA dropped the legal case against three companies: Avalon Offshore Logistics LimitedOIT Africa Limited, and RemX Capital Limited, all of which were named in an international money laundering syndicate.

Kenya ARA

The three Nigerian companies were at risk of losing KSh5.7 billion ($47.4 million) to the State as proceeds of crime when ARA filed the lawsuit in July. But, the court filings in September showed that ARA requested a case withdrawal from the court on August 29, which was granted on September 7.

Similar: Kenya’s ARA drops money laundering case against 3 Nigerian companies

Up to the time of writing this report, the reasons for dropping the charges have not been officially revealed. But, we hinted then that may be the first in a series of backpedalling by the ARA as some of the initial charges were fallouts of a political tussle that trailed the recently concluded elections in Kenya.

The big question at this point is: Will these Nigerian fintech companies continue to pursue business interests in Kenya without future fears of similar events?

Korapay hasn’t said whether or not it will continue the process of getting the payment service provider and remittance operator license in Kenya.


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