Court blocks CBK over license row with Payments firm Tangaza

By Steve Umidha

The Central Bank of Kenya (CBK) has been barred from interfering with Our Open Market Ltd operations – a software firm that operates payments service provider Mobile Pay Limited (MPL) whose service brand name is Tangaza.

In a Tuesday High Court ruling, Lady Justice Janet Mulwa instructed lawyers representing the CBK and MPL owners to file their respective submissions before November 8, when the case is censured for hearing. It is being represented by Kangethe & Mola Advocates.

The ruling now offers temporary reprieve to the payments firm whose offices were raided in October 26, 2021 by officials from the Central bank, revoking its licence in the process over regulatory breaches.

The firm yesterday claimed CBK forcefully took over control of Data Centers, Data, Software Systems, computers, and equipment operated by affiliate companies Mobile Pay Limited, Our Open Market Limited and Creative World Architects.

“That the application is certified urgent. It shall be served upon the respondents for inter partes hearing on the 8^th November, 2021. All parties are urged to file their submissions and exchange before the hearing date,” ordered Justice Mulwa in her October 29 ruling.

CBK while revoking its license last week, accused the firm of repeatedly violating the NPS (National Payments System) law and regulation and had failed to submit tax compliance reports including audited financial reports as required by the regulator.

“MPL has persistently failed to discharge its statutory obligations, among others, non-submission of audited annual Financial Accounts of the Trust Fund (Tangaza Trust) and MPL, non-submission of annual systems security audit report, and non-submission of quarterly reports for CBK’s oversight,” argued CBK, saying the firm was putting customer funds at risk.

Yesterday while addressing the media, the firm, however, refuted those concerns, pledging safety of its customer funds, adding, “We hope that the Central Bank will abide by the rule of law and comply with the high court orders as served.”

“We wish to bring to the attention of the General Public that contrary to CBK press release indicating that “customer funds may be at risk” and that “Public Trust” could be eroded, no customer funds were exposed to any risk and all customer funds have always been available and safe since 2011 and no complaints of any nature were raised with them by our customers,” said its Chief executive Oscar Ikinu, while addressing journalists.

MPL is the smallest of the four mobile Payments Service Providers in Kenya – PSPs, with less than 0.01 per cent of total mobile money subscribers which described last week’s actions as “procedural and without compliance of the law.”

“It is instructive to note that their action was misguided and in total abuse of the Law and their market power,” the firm noted.

This comes barely a month following proposals in the Central Bank of Kenya amendment 2021 bill which gives it the power to cap interest rates and revoke licenses of digital lenders that breach Data Protection Act as well as the Consumer Protection Act.

The bill, according to CBK, is meant to shield consumers from rogue digital lenders who offer high-priced collateral-free loans. It grants the regulator power to oversee the operations of standalone digital lenders that are not affiliated with banks.

Digital lenders will, going forward, be required to obtain licenses to operate in Kenya, unlike previously, when they just had to register — which led to the proliferation of rogue apps. The move is being backed by the Digital Lenders Association (DLAK).