According to a TechCrunch report, the move follows a legal battle involving allegations of money laundering and fraud against Flutterwave, resulting in the freezing of $3 million last year.

Last August, Flutterwave, along with other entities, faced a major setback as $52.5 million was frozen by the Kenyan court, leading to a series of legal challenges filed by the Assets Recovery Agency (ARA). 

The recent withdrawal of the second case is a relief for Flutterwave, as it actively pursues a payments service provider and remittances license from the Central Bank of Kenya, which had flagged the company for operating without one.

The ARA’s decision to withdraw the case follows a thorough reevaluation, with investigations revealing that Flutterwave was not involved in any criminal activities, including money laundering and fraud. The court’s ruling to allow the withdrawal was based on the agency’s acknowledgment that the funds in question were not proceeds of crime.

This turn of events comes after a prior refusal by the judge in July to allow the case withdrawal. At that time, the judge demanded detailed affidavits from the ARA’s director and investigating officer, questioning the sudden lack of evidence after the agency had initially presented extensive documentation, including bank statements.

In a scathing rebuke, the judge criticized the ARA for initiating proceedings without completing its investigations, deeming it “inappropriate, negligent, reckless, and absurd.” The withdrawal, however, is conditional, ensuring that any future civil or tortious liabilities resulting from the case will not burden the Kenyan government or public funds. Instead, the responsibility will rest “solely and personally” on the ARA’s director and investigator.

As a consequence of this legal resolution, Kenya is set to release the frozen $3 million to Flutterwave, along with co-accused entities Adguru and Hupesi Solutions. The closure of the initial case in March saw the release of $52.5 million after the ARA formally withdrew its allegations.

Flutterwave’s exoneration comes at a juncture where the company intensifies its efforts to expand its operations within Kenya’s financial landscape.

The two separate suits, which were filed by the Asset Recovery Agency (ARA), were Issued by Kenyan High Court’s Lady Justice Esther Maina.

ARA states that both fintechs companies are utilized by fraudsters for international money laundering, using Kenyan banks to receive money from untraceable foreign sources.

In the case of Korapay, $249,990 (Sh29.5 million) was frozen in the company’s account at Equity Bank, while that of Kandon was $126,800 (Sh15 million) in two of its accounts at UBA bank.

For Kandon, ARA also establishes that the company siphoned over $42 billion (Sh5.5 billion) which was transacted through its bank account at UBA in seven months between October 2021 and April this year.

“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.” — ARA.

In further establishments, ARA notes that the company quickly transferred the money received to other bank accounts to disguise and conceal the source and destination of the suspected illicit funds.

ARA affirms 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.

In Justice Maina’s ruling: “The court issues preservation orders prohibiting the respondents or their agents from withdrawing or transferring the money in the stated accounts for six months to allow Asset Recovery Agency complete investigations in the allegations of money laundering.”