African fintech giant; Flutterwave, has moved attention back to the Central Bank of Kenya (CBK) after making it known that it had applied for a license with the banking sector regulator as far back as 2019, three (3) years before the present situation.
The Central Bank of Kenya (CBK) had earlier on stated that Flutterwave was carrying out its operations in Kenya without having a permit. The revelation sparked up a fresh conversation about how difficult it is for fintechs to secure licenses.
A directive from the Central Bank of Kenya (CBK) instructed micro finance institutions and banks to stop all transactions with Flutterwave and Chipper Cash which is another payments technology company.
With Kenya being Flutterwave’s second biggest market behind Nigeria the revelation that it had been operating without a license, might lead to more attention or eyes on the regulation of financial technology companies in the country.
Flutterwave made it known via a statement that, “In 2019, as our operations grew, Flutterwave submitted its application for a payment service provider licence.”
Read Also: Kenya Freezes Over 6 Billion Kenyan Shillings Tied To Flutterwave
It added that, “We have been in constant engagement with the Central Bank of Kenya to ensure that we provide all the requirements and we look forward to receiving our licence.”
Flutterwave has also been in the middle of an ongoing money laundering inquiry being carried out by the Assets Recovery Authority (ARA). Before now, it was not known whether or not Flutterwave had any approvals from the regulator, to carry out its operations in Kenya.
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The Central Bank of Kenya (CBK) through a letter to Chief Executive Officers (CEOs) instructed all lenders to end the transactions with both financial technology companies. This meant that their money would be frozen and their accounts would be closed.
The lenders were to then respond to the Central Bank of Kenya (CBK) within seven (7) days.
The letter in question reads, “It has come to the attention of the Central Bank of Kenya that Flutterwave Payments Technology and Chipper Technologies have been engaging in the money remittance business without licensing and authorisation by CBK.”
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In the letter it was also stated that, “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.”
In February of 2022, the fintech company; Flutterwave, raised a total of 28.41 billion Kenyan Shillings. The funding was intended to finance acquisitions and mergers it will partake in with regards to Kenya and the rest of the African continent.
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According to Flutterwave, “We understand and are respectful of the Central Bank of Kenya’s responsibility to protect the payments ecosystem and we support the ongoing collaboration between regulators and fintechs to create an atmosphere that fosters innovation in the financial services industry.”
It added that, “Like many other financial technology service providers in Kenya, our entry into the market was through partnerships with banks and mobile network operators licensed by the Central Bank of Kenya.”
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The High Court of Kenya ordered the freezing of more than 6.2 billion Kenyan Shillings spread across sixty two (62) bank accounts that belonged to the start up as well as four (4) Kenyans. The decision was made as a result of concerns that the money was from money laundering and card fraud.
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