The High Court has refused to lift the orders freezing over Sh7.8 billion held by Virtual Financials International Limited, an international payment solutions company, citing allegations of money laundering.
Virtual Financials International Limited had applied to have the July 26, 2024 judgment reviewed and set aside, saying its failure to disclose the source of the funds was based on legal advice from its former lawyer. But the court dismissed the application and allowed the Asset Recovery Agency (ARA) to keep the freeze on the funds in two Equity Bank accounts.
Court Ruling and reasoning
The judgment led to the forfeiture of $60,789,500 (Sh7.8 billion) from one account and $16,661.75 (Sh2 million) from another, declaring the funds as proceeds of crime. Virtual Financials then filed an application for review, with one of its directors, David Obangi, saying the company could explain the source of the funds. He blamed the company’s former lawyer for advising them to not present all the necessary documents to prove the legitimacy of the funds.
Mr Obangi said their former lawyer advised them to rely on the burden of proof on ARA. But Justice Benjamin Musyoki dismissed the application saying the new evidence presented did not show the source of the funds. Instead it only showed the company’s relationships with affiliate companies like Valsen Fiduciaries (Seychelles) Limited and Virtual Financials International’s operations in over 20 countries.
Failed to justify fund sources
Justice Musyoki noted that the company did not explain the origins of the funds held by its affiliates. He said anti-money laundering laws aim to curb financial activities that lack transparency on the primary source of funds. “Showing a source of transfer without disclosing the seed business is what the anti-money laundering laws seek to nip,” he said.
The judge also dismissed the company’s argument that it was misled by its lawyer, saying ignorance of the law is not a valid ground for review or setting aside a court order. “Ignorance of the law is not a defense,” he said, adding that Virtual Financials should have proactively provided evidence of legitimate business.
Background and Regulatory Approval
Virtual Pay International Limited, a related company, was licensed by the Central Bank of Kenya (CBK) in October 2023 to be a payment service provider. The company said its financial dealings were in Rwanda, Tanzania, Mauritius, Dubai, Uganda, Hong Kong and Sri Lanka. It also claimed the frozen funds were dividends, salaries and allowances.
But ARA said investigations showed the company, its directors and associates were involved in money laundering activities. Investigator Isaac Nakitare said the company was using schemes to conceal and disguise the source, movement and nature of the funds which were suspected to be proceeds of crime.