Flutterwave now says it applied for CBK licence in 2019Tuesday August 02 2022
Embattled Nigerian fintech Flutterwave shifted the spotlight back to the Central Bank of Kenya (CBK) after it revealed that it made a licence application to the banking sector regulator in 2019, three years before its current predicament.
The firm last week attracted the wrath of the CBK after it emerged that it had been operating in Kenya without a permit, reigniting the debate on the licensing nightmare for fintechs.
The CBK last week directed banks and microfinance institutions to cease dealing with payments technology firm Flutterwave alongside another firm Chipper Cash.
Kenya is the firm’s second-largest market after Nigeria, and the revelation that it operated without a licence is likely to turn scrutiny on the regulation of financial technology firms.
“In 2019, as our operations grew, Flutterwave submitted its application for a payment service provider licence,” said the firm in a statement.
“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 is at the centre of a complex money-laundering inquiry by the Assets Recovery Authority. It had been unclear until now whether the company had regulatory approvals to operate in Kenya.
In a letter to chief executives, the banking regulator last week directed the lenders to end links with the fast-growing payments unicorns, which could mean closing all accounts and freezing the cash. The lenders are to report back to CBK within seven days.
“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,” the letter read in part.
"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, Flutterwave raised Sh28.41 billion largely for financing mergers and acquisitions in the growing payments market on the continent including Kenya.
“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,” said Flutterwave.
“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.”
The High Court, early last month, froze more than Sh6.2 billion spread in 62 bank accounts belonging to the Nigerian start-up and four Kenyans on fears they are proceeds of card fraud and money laundering.