Global payments giant PayPal has frozen money in an unknown number of Kenyans’ accounts and permanently banned other users over failure to prove their employment and residential details.
The company has been demanding that Kenyan users receiving money from overseas give details of their contracts for the work being paid for, bank statements and proof of their physical addresses to access their money.
Users who do not provide these details have been blocked from transferring their cash to other users or withdrawing the funds for at least six months.
Accounts that remain non-compliant for over six months are permanently deactivated without wiring back the cash to the sender, as part of the anti-money laundering drive.
The affected PayPal users range from individual sellers to start-up companies, creative artists and impromptu philanthropists.
“We are no longer offering PayPal services for this account. Sometimes we can’t process account activity for a variety of reasons, including local laws, our policies, or the policies of our partner banks and card networks,” reads a notice displayed in one of the deactivated Kenya accounts.
Kenya remains in the list of countries at high risk for money laundering and terrorist financing, with the Financial Action Task Force (FATF) placing the country on its “grey list.”
When it was founded in 1998, PayPal was among the first companies that allowed people to easily transmit funds to one another over the internet.
Now, the firm has tightened its anti-money laundering rules and put in place aggressive anti-fraud measures.
The firm earlier said one potential sign of fraud is an unusually large transaction.
Another warning sign is a spike in activity, like a sudden burst of transactions in a formerly quiet account.
In Kenya, the affected users can still access account information, including the transaction details and account balance but are unable to send or receive payments.
The American firm told the affected users that the remaining balances may be held for up to 180 days before being cleared for withdrawal.
“Before you can withdraw or transfer any remaining funds from your account, we need to hold them for 180 days to cover things like chargebacks or other financial liabilities,” the company informed the frozen users in a notice seen by the Business Daily.
PayPal has demanded documentation like proof of physical addresses from some Kenyans despite providing evidence of legitimate business activity.
Lack of home address labelling has made it difficult for some users to comply with the tough PayPal conditions.
A Kenyan freelance writer whose account the Business Daily saw cannot access $190 (Sh24,500) paid by a UK-based client after PayPal flagged the transaction for review.
“You can no longer use PayPal as we’ve decided to permanently limit your account after a review,” reads a notice sent by the company.
PayPal requested copies of the contract related to the work performed, as well as identity documents whose names exactly matched the details registered on the PayPal account.
He uploaded the documents, but after attempting to transfer the funds to his Kenyan bank account, PayPal permanently limited the account. The firm said it had detected suspicious activity.
“We noticed activity in your account that’s inconsistent with our user agreement, and we no longer offer you PayPal services,” reads another notice.
On its website, PayPal says it screens customer accounts against government watch lists.
“We may request that you provide us with documentation to help prove your identity or for business verification purposes. We report suspicious transactions to the financial intelligence unit in the respective country,” says the company.
Under PayPal’s policies, bank accounts or payment cards linked to a restricted account cannot be removed or used to create another PayPal account.
The user was also informed that future payments may be subject to holds of up to 21 days.
Another Kenyan user whose funds have been frozen for more than two months said PayPal asked for proof of physical address through utility bills, such as electricity, water, gas or internet statements.
“It is frustrating because we do not use a formal residential addressing system like the US or Europe; we rely on landmarks and unstructured street names. Does that mean I cannot receive money?” he told the Business Daily.
Paypal is one of the largest digital payments firms globally, handling payments worth $464 billion (Sh60 trillion) between January and March 2026 alone.
The firm has over 439 million accounts globally, although it does not disclose its Kenya or Africa numbers.
In Kenya, the platform is mostly preferred by freelancers and online workers who receive payments from clients abroad, as well as users who shop online and do not want to share credit card or bank details.
The company has been criticised for freezing users’ money for years, especially in African markets like Nigeria, which have been under global watch for money laundering.
PayPal did not respond to Business Daily’s queries on the frozen and blocked accounts.
Under PayPal’s customer identification process, users are required to scan government-issued identification documents and verify their identity through facial recognition technology.
PayPal does not have offices in Africa and instead operates through partnerships with financial institutions and telcos across the continent.
In Kenya, Equity Bank is the only lender with a direct withdrawal partnership with PayPal, allowing customers to transfer funds from their PayPal balances directly into bank accounts.
Safaricom’s M-Pesa also operates a similar integration with PayPal.
For other banks, customers link Visa and Mastercard payment cards issued by the lenders to fund purchases and receive withdrawals.
