Kenya clears Kora of money laundering and card fraud allegations

Kenya clears Kora of money laundering and card fraud allegations

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The money laundering and card fraud allegations raised against Korapay, the Nigerian payment company, by Kenya’s Asset Recovery Agency (ARA) in July have been dropped, according to documents seen by TechCabal. 

According to its website, ARA is the Kenyan agency that identifies, traces, freezes, seizes, confiscates, and recovers proceeds of crime in the East African country. In July 2022, the agency filed two separate suits, leading to the freezing of Kora’s accounts alongside those of Kandon Technologies Limited, another Nigerian fintech company, by a Kenyan High Court on July 14th. 

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The two Techstars-backed companies were alleged to be siphoning Sh6 billion (~$51 million) into Kenya. As such, per the order delivered by Lady Justice Esther Maina, the court froze $249,990 (Sh29.5 million) in Kora’s Equity Bank account, and $126,841 (Sh15 million) in Kandon Technologies Ltd’s two UBA’s accounts. ARA also allegedly linked them with five other Nigerian companies and a Kenyan businessman—Flutterwave Ltd, Elivalat Fintech Ltd, Hupesi Solutions, Boxtrip Travels and Tours, Bagtrip Travels Ltd, Cruz Ride Auto Ltd, and businessman Simon Karanja—whose combined 62 bank accounts containing over Sh6 billion have been frozen over similar allegations. Flutterwave’s CEO has since denied the allegation and instead dismissed them as politically motivated to target Nigerian firms close to Kenya’s election. 

According to the July 14 ruling, both Kora and Kandon would not be able to operate the frozen accounts for six months, until ARA completed its investigations. But now, barely four months later, it appears the case has been settled, according to two documents seen by TechCabal.

In one court document, which was drawn and filed on the 19th of October 2022 by state counsel Stephen Githinji on behalf of the ARA director, the agency said that it has withdrawn its lawsuit in its entirety.

In another document issued by the Directorate of Criminal Investigation (DCI) on September 11, and addressed to Wetangula, Adan & Company Advocates, Kora’s Kenyan solicitor, the agency said there’s currently no evidence to prove the payment company guilty of money laundering or card fraud. 

Speaking on this development, Gideon Orovwiroro, Kora’s Chief Operations Officer, said, in a statement shared with TechCabal, that Kora has maintained its innocence since the news broke. On July 15, the day after the court ordered its account to be frozen, Kora released a statement to debunk all the allegations levied against it.

“We are confident that the Kenyan courts will come to see that the accusations against us are not only wholly baseless but borderline malicious,” Kora’s July 15 statement read. “As part of the capital requirements from the Central Bank of Kenya (CBK) for obtaining a payment service provider and remittance operator license (PDF Pg. 720), Kora deposited the sum of $250,000 in its freshly opened bank account. In line with CBK requirements, this amount was left untouched pending the granting of our license.” 

Per the issue of licensing, DCI advised Kora to liaise with the regulatory authorities in order to obtain the necessary licenses if it wishes to carry out business in Kenya. DCI stated this in the conclusion of its document ratifying Kora. “Our primary work in Kenya till date has been applying to get licenses to operate as a payment and remittance services provider,” Orovwiroro told TechCabal over an email. “We will continue to work on that.” 

But acquiring financial services licenses in Kenya seems to be a hard nut to crack. Despite fulfilling CBK’s deposit requirements, Kora still hasn’t been awarded a license, and other fintech companies face the same reality. Recently, Flutterwave and Chipper Cash, two out of Africa’s seven unicorns, were axed from processing payments in the country due to a lack of the required licenses. 

However, in a positive turn of events, Paystack, another Nigerian payment startup, acquired the seemingly elusive payment service provider license from the CBK in November. This development is expected to ease the process for others, or at least boost their confidence to apply for a license in the future.

Orovwiroro also told TechCabal that the allegation had zero impact on Kora’s business. According to him, despite the back-and-forth, the company acknowledges the potential Kenya presents to their mission of making it easy for global businesses to accept payments in Africa, and for African businesses to accept global payments. “We are launching multi-currency bank account products for African businesses. This will empower merchants to have bank accounts in GBP, EUR, USD and other in-demand currencies,” he concluded.

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