Nigerian fintech companies are seriously becoming the new “yahoo,” thanks to the recent revelations in the cases of internet fraud and money laundering against some of them.
Otherwise, how else can we best describe the situation if not that the Nigerian fintech companies are now the new yahoo?
Some of them have begun operating as yahoo boys, though without the Yahoo Messenger accounts!
How?
To further analyse their similarities, let us look at what a “yahoo” fraudster means.
A Yahoo person is a fraudster who engages in 419 fraud.
Also called the “Nigerian letter” and “advance-fee fraud,” the 419 fraud refers to a section of the criminal code in Nigeria that refers to fax and email spam.
These spamming claims that recipients can receive money (often millions of dollars or Euros) simply by providing details of their bank accounts to the criminals.
Similarities:
Just like the way Yahoo fraudsters use their yahoo accounts to ‘bomb’ (betray) their victims’ or “Magas'” trusts, so these Nigerian fintech companies are betraying the trust placed on them.
Regardless of whether they directly hoodwinked “clients or Magas” or became channels for fraudsters to wire money to themselves, they are accomplices!
No wonder we see trusted Nigerian fintech companies and executives being indicted over money laundering, with some even pleading guilty to internet fraud.
The cases:
Recently, Flutterwave emerged like a yahoo as it continuously performed a public dance of shame even on the Kenyan financial stage where the Kenyan high court froze its numerous bank accounts over money laundering.
Before that, the fintech company had been in the news for the wrong reasons, another Yahoo-like case.
And what was it about? An independent investigative journalist, David Hundeyin, published a damning report against it.
The journalist titled the report, “Flutterwave: The African Unicorn Built On Quicksand.”
The report accused the Nigerian tech unicorn of “insider trading, fraud, and perjury” occurring over a 4 year period.
In yet another negative news, the Kenyan court froze about 56 bank accounts belonging to Flutterwave over money laundering to the tune of $59 million.
Read full details here.
As if that is not all, Korapay, another Nigerian fintech company, got indicted for fraud and money laundering to the tune of $250,000.
Further denting the flourishing Nigerian fintech space as well as rubbing mud on the country is the case of some Nigerian executives of a United state’s fintech company, Ping Express.
Just like the Economic and Financial Crimes Commission, EFCC, suddenly swoops in on the “G-Boys,” [another name for Yahoo boys] so has the US Department of Justice, DOJ, swooped in on Nigerian executives of the Ping Express fintech over money laundering and internet fraud.
The fintech executives who are Nigerians with the names Anslem Oshionebo and Opeyemi Odeyale pleaded guilty to contravening money laundering rules after sending $167 million to Africa unchecked in less than three years.
While Oshionebo is the chief executive officer, oyedale is chief operating officer and both are suspected to have laundered $160 million out the to Nigeria.
ALSO READ: Real Reasons Why Flutterwave, Busha, Eversend Suspend Virtual Card Services in Nigeria
READ ALSO: Flutterwave Back In The Mud As Kenyan Court Freezes Bank Accounts
ALSO READ: Kuda No Longer Bank Of The Free With N50 Charges
According to DOJ, one Collins Orogun admitted last week that he accepted a fee in exchange for transferring money for ‘romance scam’ fraudsters and other criminals.
Well, they are currently serving 27 months imprisonment for breaching money laundering rules in the US.
This was after they pleaded guilty to the charges.
The Nigerian Fintech loan sharks:
Again, like the yahoo boys operate by stealing private data of their victims, so do some fintech companies, especially the loan sharks, do.
They entice you with cheap offers but in the process, they steal your contact list and other private data.
Then, before you say Amadu, Chinedu of Femi, they have already started intruding into the privacy of your contacts.
Your loved ones, friends, just anybody on your contact list.
These categories of fintech companies in Nigeria would call and send multiple text messages to your contacts, threatening them to pay for a loan that does not concern them after all.
ALSO READ: Five Fintech Companies To Look Out For In 2022
They also send damaging messages that label you with any derogatory name they can think of.
Several persons have receive similar messages and calls from fintech loan apps like NairaPlus, EasyCredit, TrueNaira, GoCash, CashLion and LCredit.
Fintech companies stealing private data is no different from yahoo fraudsters stealing private data of their victims to cause them different kinds of traumas.
Recall that on August 17, the National Information and Technology Development Agency (NITDA), slammed Soko Lending Company, a Nigerian online fintech lending platform, with a fine of ₦10 million for privacy invasion.
The Denials:
Note that some of the Nigerian Fintech companies have denied allegations of fraud against them.
Flutterwave denied the allegations of money laundering that led to the freezing of its accounts by a Kenyan court.
In a statement, Flutterwave said:
“Claims of financial improprieties involving the company in Kenya are entirely false, and we have the records to verify this.”
“We are a financial technology company that maintains the highest regulatory standards in our 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.”
It added saying it only “collect{s} and pay{s} on behalf of merchants and corporate entities.”
Explaining how it makes its own money, Flutterwave said “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.
“By facilitating payments for the biggest organizations in the world and everyday businesses, we process significantly large volumes of money and contribute to growing the economy in Kenya, and the rest of Africa.”
“We are working to ascertain the motive behind the false claims, and have the records straightened.”
Kora denies allegation:
Kora, on its won, equally denied engaging in money laundering.
In a statement, it said it legally deposited in its Kenyan account, the $250,000 which the Kenyan court accuses it of money laundering.
The Fintech company also added that the said fund is part of the capital requirements from the Central Bank of Kenya (CBK) for obtaining a payment service provider and remittance operator license.
Kora in a statement issued by its Head of Marketing and Communications, Gbenga Onalaja, said:
“As part of the capital requirements from the CBK for obtaining a payment service provider and remittance operator license, 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.
“Easily verifiable records of this account will show that the $250,000 deposit is the only transaction carried out on that account to date.”
“Unfortunately, Kora has been dragged through Kenyan courts on empty, unfounded allegations of money laundering since May of 2022.
“As a responsible corporate citizen, we have consistently challenged all these allegations in court and will continue to do so; we have documents that support our position.
“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 is deeply committed to being an ethical African payments company.
“Across all the jurisdictions we operate from, we hold ourselves to strict compliance standards through stringent anti-money laundering (AML) processes.
“We plan to continue our engagement with Kenyan regulators to resolve this matter as Kenya remains a crucial component of our African ambitions.”
Implications:
Funding for Nigerian tech firms have dropped by 30% in the second quarter of 2022.
The Nigerian tech sector boasts as one of the continent’s best, as it attracted huge funding from investors.
However, data from database and insights firm, The Big Deal, revealed that of the big four African countries — Nigeria, Egypt, South Africa, and Kenya —only Nigeria recorded a drop in funding.
According to the firm:
“Start-ups in Africa have raised $1.3bn in Q2 2022, which adds up to $3.1bn in the first half of the year.
“Let me put it this way: June 2022 was the ecosystem’s strongest June ever in terms of fundraising.
“Q2 2022 was the ecosystem’s strongest Q2 ever. H1 2022 was the ecosystem’s strongest H1 ever.”
it said, overall, funding into the nation in Q2 2022 is 2.3 times higher than it was in Q2 2021.
“June 2022 was much stronger than June 2021 in South Africa (6.4x YoY), Egypt (3.4x) and Kenya (3.3x); only in Nigeria do we see a dip (-30 per cent), which does not weigh down on its Q2 and H1 numbers though.”
In the first quarter of 2022, Nigerian startups raised $600m, followed by Kenya’s $482m, South Africa’s $228m, and Egypt’s $202m.
The firm gave reasons for the dip in fund raising to include the following:
“Now there’s no denying that the context is tough and that between inflation, food insecurity, bear markets, supply chain issues and more, start-ups in Africa are/will be affected in their growth and capacity to raise.”
However, the latest cases of fraud against startups in the country could be another reason the nation is attracting less funding.
Meanwhile, recall also that some some of the fintech companies recently suspended their virtual dollar card services.
Flutterwave’s Barter, crypto exchange, Busha, Payday and Eversend are among the ones who shut down their virtual dollar services in Nigeria.
Techuncode reported that one of the real reasons why they stopped the virtual dollar card services is that Union54- a financial technology company offering card issuing services in partnership with licensed card issuers like Flutterwave, allegedly wants to Nigeria.
The alleged exit was likely following the freezing of several bank accounts of Nigerian fintech companies by the Kenyan High Court over money laundering.
Therefore, the Nigerian fintech companies need to brace up and clean themselves of the mud conspicuously denting their images.
They must ensure that they avoid engaging or abating any fraudulent transactions that could further tarnish the image of the budding fintech sector in Nigeria.
Also, they must seek legal licenses and adopt legal ways of providing financial services to boost the confidence and trust that investors and the entire world have on the sector.
They must “deworm” themselves of the yahoo tendency that seem to characterise them and begin to chart better courses and further grow the fintech space in Nigeria to more enviable heights.
Found this interesting? Share!
and then