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Fintechs in Kenya Face Severe Consequences From CBK for Dealing Without Licensing or Authorisation

The Central Bank of Kenya (CBK) has directed lenders and microfinance institutions to stop dealing with fintech firms Flutterwave and Chipper Cash, according to media reports.

The two start-ups have been engaging in money remittance business without the necessary authorisation from the banking authority, the CBK said in a letter to chief executives of commercial banks, microfinance companies and mortgage finance firms.

“It has come to the attention of the CBK that Flutterwave Payments Technology Ltd and Chipper Technologies Ltd have been engaging in the money remittance business without licensing and authorisation by CBK,” the letter, quoted by Kenya’s Business Day, stated.

The move comes days after CBK Governor Patrick Njoroge told the media at the Monetary Policy Committee meeting that the two fintech firms were not licensed to provide remittance and payment services in the country.

Money remittance services in Kenya are regulated under the Central Bank of Kenya Act and the Money Remittance Regulations, 2013. Money payment services are regulated under the National Payment System Act and the National Payment System Regulations, 2014, the letter stated.

In a statement, Flutterwave said it was hoping to get the license soon, which was requested in 2019.

The Nigerian fintech reiterated its commitment to operate within Kenya’s laws, regulations and industry standards.

“We are understanding and respectful of the Central Bank of Kenya’s responsibility to protect the payments ecosystem. We support the ongoing collaboration between regulators and fintechs to create an atmosphere that fosters innovation in the financial services industry,” the statement said.

This is not the first time Flutterwave has been in deep water with the Kenyan authorities. In July 2022, a court in Kenya froze more than $40million in accounts belonging to Flutterwave under the country’s anti-money laundering laws.

In a statement attributed to Kenya’s Assets Recovery Agency, Flutterwave was among seven firms suspected to have been used as conduits for card fraud in banks in the guise of providing merchant services.

Author

  • Francis is a journalist with a BA in Classical Civilization, he has a specialist interest in North and South America.

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