Kenya’s Asset Recovery Agency (ARA) has cleared Nigerian fintech, Kora, of money laundering charges. In a document seen by Techpoint dated October 19, 2022, state counsel Stephen Githinji, filed a withdrawal notice on the company’s behalf.
Another document from the directorate of criminal investigations (DCI) also stated that it could not establish any allegations of money laundering or fraud against Kora.
Recall that in July 2022, a Kenyan high court ordered the freezing of accounts belonging to Nigerian fintechs – Flutterwave, Kora, and Kandon technologies. That was the latest entry in the court’s freezing spree after similar allegations were made against Multigate Limited and Remx Capital Limited, among others.
It’s noteworthy that these companies were all Nigerian, and the timing of the court order trailed Kenya’s presidential elections. In what seemed to be a witchhunt of Nigerian companies, sources close to the matter indicated that some parties tried to use these orders to exploit the companies affected.
At the time, the ARA alleged that Kora and Kandon Technologies siphoned up to $6 billion with the suspicious movement of funds. It also stated that both companies were linked to Flutterwave and the related companies it accused of money laundering.
However, Kora promptly denied the allegations, showing Techpoint documents to prove that the money deposited was meant to acquire a license to operate in Kenya.
It would be a good time to mention that getting a financial services licence in Kenya takes quite a long time, and Nigeria’s Paystack recently acquired a Payments Service Provider (PSP) licence in Kenya.
In a statement shared with Techpoint, Kora's Chief Operations Officer stated that the company maintained its innocence throughout the process stating, “We are delighted to get back to building the most robust payment product on the African continent.”
Following the turn of events, we had some questions for Kora’s CEO, Dickson Nsofor, who gave deep context behind the events in Kenya, and what the future holds for the company.
Kora was trying to secure a licence in Kenya when the court order came in. What does this mean for your activities in Kenya?
Nsofor: The court order and allegations were just a little sand in our way. We're still going to pursue our Pan-African expansion actively. We intend to be in all 54 countries in Africa within the next two to three years, and Kenya for sure is one of them.
We are currently working with the regulators in Kenya to secure our license. We also work with licensed partners in Kenya to deliver our promise to African businesses.
We’ll keep building to serve merchants that are in Kenya or merchants that want to do business in Kenya.
We’ve noted that getting a fintech licence in Kenya is tricky and takes time. Are we seeing a regulatory update from Kora soon?
Nsofor: Yeah, we’re looking to get positive feedback from all the African countries we’ve worked with in the past months. The countries are not just Kenya but Tanzania, Uganda, South Africa, Ghana, and other African countries. So we're waiting for positive developments from most of them.
We’ve made a $250k deposit for a Kenyan licence, and we’ve also done the same in multiple African countries, the UK and the EU.
The ARA's initial gripe was the movement of funds across different companies. How did that play out during the investigations?
Nsofor: The most important thing is that the court has vindicated us, and the agency has withdrawn its statement. Kora, as a business, never did any transactions in Kenya. We processed money through licensed partners, but we didn’t touch money.
We were surprised by the allegations, but we’re pleased with the ARA's work in looking through the case, and we’re glad the court upheld the proper judgement.
Did the issue in Kenya affect your business in any way?
Nsofor: We didn’t lose business from the allegations. Most of our customers knew we didn’t do anything, and they remained with us. When the news broke, it was terrible. People outside the continent see it and probably think the reports were accurate since we’re from Nigeria.
At the time, we were getting the occasional queries, but we’re glad that the issue is over, and we’ve been sharing the news reports with our investors and partners.
The ARA’s initial allegation seems to be a side-effect of Africa’s fragmented payments space. What do you think about this?
Nsofor: Africa’s payment space is quite fragmented, and that’s because we don’t have a central payment switch like Swift or the Automated Clearing House (ACH) network. We’re so fragmented that for money to move from Nigeria to Ghana, you must go to JP Morgan in the US and then go to the correspondent bank, HSBC UK bank plc before it moves to Ghana.
I can drive that cash in eight hours, and I'll be in Ghana faster than that money moving electronically in three days.
The issues in Kenya have not helped matters, but it has rekindled my fire and my vision for Kora, which is to build a future devoid of financial service barriers across Africa. We will be that company that will unite all of Africa under one single API.
The event has created a clarity of purpose, and we’ll be in the business of connecting Africa.
What do you think about the future of multicurrency payments and regulatory developments in this space?
Nsofor: You need to be able to bridge the global financial system and the African financial system. That bridge will provide global-grade (world-class) financial services to local and pan-African businesses. Helping them access pounds, Euros, and dollars will also be at the forefront of this evolution.
I’m excited that other companies are building this, and with more people making such solutions, we have more financial inclusion and access to financial services.
Kora’s acquittal follows that of Multigate and Remx Capital and points to similar decisions for African unicorn Flutterwave. However, as Nsofor points out, there’s more to be done in Africa’s payment space, and all hands need to be on deck to achieve this.
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