Two more global cross-border payment platforms have stopped receiving and sending cash to Kenya amid increased anti-money laundering scrutiny across nations.
US firm Sendwave and UK-based money transfer firm Wise have stopped cash transfer services for the majority of Kenyan users from August, with the American firm citing technical difficulties.
Kenya has been under increased scrutiny for illicit cash flows and is on the list of countries at high risk of money laundering and terrorist financing, with the Financial Action Task Force (FATF) placing the country on its “grey list.”
These checks make global payment firms spend heavily on tracking transfers and other compliance mandates, leading some to pull out rather than risk violations and punishments.
“Due to technical difficulties, we’re currently unable to offer wallet services in Kenya. We know how important it is to have access to your money, and we’re sorry for the inconvenience this may cause,” Sendwave told a Kenyan user in an email seen by the Business Daily.
Sendwave allows customers to create multi-currency digital wallets through a mobile app for cross-border cash transfer.
Sendwave said it was “unsure” how long it would take to fix the “technical difficulties” while advising users to withdraw the cash balances in virtual wallets.
Last month, Sendwave was cited in a Kenyan court as one of the platforms used to wire cash from the US in a Sh300 million money laundering case involving local bank accounts and cryptocurrency networks.
Detectives said they had requested international transaction data from the US government to trace the origins of the money.
The company did not respond to Business Daily’s queries. On its website, it still lists Kenya among the African countries it serves.
Some Kenyan users on the Wise platform have also reported restrictions from July ahead of account closures in October.
The firm allows Kenyans to receive money from holders of US dollar, Euro and British Pound accounts abroad directly into their local Shilling bank accounts and M-Pesa mobile wallets.
“We’ve restricted your account and will close it on October 3,” the company told a user via email. “You can no longer send and receive money, or use your card.”
Wise did not disclose the reasons for the suspension.
In July, Hurupay stopped processing cross-border money transfers and cryptocurrencies in Kenya.
The firm provides individuals and businesses with virtual US dollar, euro and sterling bank accounts that can be used to receive payments easily, send money globally, or convert funds into cryptocurrencies such as stablecoins.
It did not disclose the reasons for the decision. It also dropped Kenya and Nigeria from the list of African countries it serves.
“We would like to inform you that Hurupay no longer supports USD banking services for customers in Kenya,” an email from the firm to a Kenyan user read.
“As a result, any payments sent to your SSB bank account will be rejected and automatically refunded to the sender.”
It came weeks after PayPal froze an unknown number of local accounts and stopped them from transferring or withdrawing cash for failing to prove their employment and residence.
Since July, some Kenyans have also reported failed cash transfers on the US-based money transfer and virtual cards issuer Chipper Cash.
Digital cross-border payment platforms are popular in Kenya among Kenyan freelancers, consultants and businesses because they allow them to receive payments from overseas clients and transfer funds to local bank accounts or M-Pesa wallets.
Families with members abroad also use them to receive money from overseas.
These users prefer internet-based money transfer platforms over traditional bank transfers mainly because they offer multi-currency accounts that bypass interbank networks such as SWIFT, which can be slow and carry high intermediary bank fees.
Kenyans who shop online and do not want to share their credit card or bank details also opt for platforms like PayPal.
Some platforms, which support cryptocurrencies, such as Hurupay, are also attractive for Kenyans making payments or receiving payments in stablecoins, a type of cryptocurrency backed by assets such as the US dollar.
Crypto and digital payments have been exploited for criminal activities due to features such as pseudonymity and borderless transfers, which make them harder for traditional financial institutions and law enforcement agencies to detect.
The Paris-based FATF added Kenya to its list of countries under special scrutiny in February 2024 due to loopholes in countering money laundering and terrorism financing.
When a country is grey-listed, its banks face tighter due diligence from foreign lenders, some international transactions are delayed, and investors flag compliance risk in country assessments.
The world’s largest crypto exchange, Binance, has also frozen an undisclosed number of local user accounts.
The UAE-based firm has barred the users from converting their crypto holdings into cash, following an order from the Kenyan government.
Binance also faces global scrutiny over accusations of money laundering and aiding US-designated terrorist organisations, including Hamas and Hezbollah, to move money.
Globally, Wise is currently under investigation in Europe over allegations that it failed to adequately identify customers and verify their activities amid suspicions that criminals used the platform for money laundering.
