State agencies have shone more spotlight on Nigeria, seizing about Sh15 billion from individuals and companies from the West African nation. PHOTO | SHUTTERSTOCK
When Nigerian Mauzu Bala landed at the Jomo Kenyatta International Airport in December 2020 carrying a bag full of undeclared money, the man who claimed to be an agent for a Dubai jeweller did not anticipate a long court fight.
Mr Mauzu landed carrying $880,000 (Sh100 million), 60,000 Euros (Sh7.74 million) and 63,000 Naira (Sh17,010) in his handbag. The Nigerian had jetted into the country on a Kenya Airways flight from Lagos and was waiting for a connecting flight to Dubai.
The funds were swiftly confiscated after the Assets Recovery Agency (ARA) suspected them to be part of a money laundering scheme on its radar.
Since then, State agencies have shone more spotlight on Nigeria, seizing about Sh15 billion from individuals and companies from the West African nation.
The bulk of the money is suspected to be from card fraud or remittance done by payment service providers at a time Kenyan authorities are cranking up the fight against money launderers who have turned Nairobi into their playground.
The biggest seizure belonged to Nigerian start-up Flutterwave. ARA believes the Sh6.2 billion in 62 bank accounts is part of card fraud and money laundering schemes.
ARA says in court filings that the cash was wired in the guise of payments for goods and services.
The US government has listed Kenya as a “major money laundering jurisdiction,” because of numerous domestic and foreign criminal activities.
A report by the Sentry titled Kenya Illicit Finance Risks and Assessment has listed domestic corruption, terrorist financing, environmental crimes, illegal trafficking, tax evasion, and the misuse of digital finance such as mobile banking and cryptocurrency as some of the risks the country faces.
Richard Oonge, an advocate of the High Court, says what has been happening in the recent past is not unusual and is only the tip of the iceberg.
Mr Oonge says the Financial Reporting Centre (FRC) and the Central Bank of Kenya are achieving better results due to increased policing of financial institutions.
“Kenya has always been used to launder money from drugs, wildlife trafficking, terrorism financing among others. But give credit to the CBK and the FRC, which has put up a strong regulatory regime and managed to flag off suspicious funds,” he said.
The lawyer said penalties imposed by CBK are not punitive enough and some banks might still be enticed (to receive such money) or fail to report suspicious funds.
He also suggested that frozen funds should be taken up by the regulator for 90 days, as state agencies investigate the source, to deny the concerned banks from benefitting from interest during the freeze period.
An advocate involved in some of the cases, who asked not to be named, said the rising uptake of technology in the country has helped fuel flow of illicit money into the country.
“Kenya has the highest share of mobile internet usage in the region. This has seen the uptake of digital services such as mobile banking, cryptocurrency among others. This penetration has come with a lot of challenges,” he said.
The lawyer said FRC has greatly helped in combatting illicit money by sharing intelligence with bodies such as ARA and Ethics and Anti-Corruption Commission (EACC). The Flutterwave billions have so far been linked to several Nigerians and four Kenyans.
“The transactions were done using cards issued by the same bank, at the same point, on the same day, raising suspicion of card fraud.”
Flutterwave said in an email to Business Daily that it is a financial technology company that maintains the highest regulatory standards in its operations.
“Our Anti-money laundering (AML) practices and operations are regularly audited by one of the Big four firms. We remain proactive in our engagements with regulatory bodies to continue to stay compliant,” the company said.
Flutterwave added that through its financial institution partners, it collects and pays on behalf of merchants and corporate entities.
“In the process, we earn our fees through a transaction charge, records of which are available and can be verified. As a business, we hold corporate funds to support our operations and provide services to all our customers,” it added.
On the same day, the money was frozen by the High Court, Justice Esther Maina also froze $1,634,973 (Sh19.3 million) held by Rainbow Techemploy Africa Ltd.
Incidentally, Rainbow was named among the firms that received money from Flutterwave. The millions frozen are being held at Guaranty Trust Bank.
Last week, the High Court froze another Sh45 million belonging to a Nigerian-linked company suspected to have laundered more than Sh6 billion through the country.
The money is linked to Korapay Technologies Limited and Kandon Technologies Limited, which ARA claims are being used by fraudsters as conduits of international money laundering.
Korapay Technologies Ltd had US $249,990 (Sh29.5 million) in their account at Equity Bank, while Kandon Technologies Ltd had Sh15 million in two accounts at UBA bank.
“Our investigations revealed that their account had transacted Sh5.5 billion in seven months and by the time we got intelligence information that they were engaged in money laundering, they had transferred the funds to other jurisdictions with only Sh15 million remaining,” said ARA.
The ARA claims that the Nigerian firms are shell companies incorporated in Kenya for purposes of taking advantage of the liberal financial system to launder funds whose sources are not legitimate.
The court heard that the firm received the Sh29.5 million in a single transaction which raised suspicion as to the source of the funds.
Other funds frozen include an estimated Sh2.3 billion ($19.48 million) linked to a woman from the Southeast Asian nation Laos with the backing of four Kenyans.
Read: Foreign woman, Kenyans linked to Sh2.3bn overseas card fraud
More billions frozen belonging to Nigerians include Sh5.6 billion, which was wired to three companies identified as OIT Africa Ltd, Avalon Offshore Logistics Ltd and RemX Capital Ltd.
In November last year, Kenya Revenue Authority (KRA) and Posta Kenya officials have recovered $28,000 (Sh3.1 million) concealed in a jacket shipped into Kenya as a parcel from South Carolina state, USA.
Posta staff working jointly with KRA customs officers based at City Square Post Office recovered the money in a suitcase containing clothes and books sent to a Nigerian national.
Mr Peter Oluwafemi Olaiwon was arrested upon presenting himself to collect the parcel which was sent by Ms Linda C Dye, a resident of South Carolina USA.
The Nigerian, who claimed that he does music production which earns approximately $2000 (Sh227,260) per month as well as poultry farming which also gives him an income of approximately $44,000 (Sh5 million) per year, said he was coming to Kenya on holiday.
In December 2020, customs officials at the Jomo Kenyatta International Airport intercepted a Nigerian- Mr Mauzu Bala while carrying $880,000 (Sh100 million), 60,000 Euros (Sh7.74 million) and 63,000 Naira (Sh17,010), in his handbag. He was headed to Dubai.
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