Kenyan Regulator Bans Unlicensed Brokers from Using M-Pesa

The Central Bank of Kenya has issued a notice to all payment service providers in the country to cease offering services to unregulated brokersFinance Magnates has learned.

Though the regulator is yet to publically notify anything on the ban, at least one of the unlicensed brokers with services in Kenya has ceased taking deposits using the widely used M-Pesa.

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The brokerage is also requesting its customers to withdraw all funds from the live accounts using M-Pesa and then using Bitcoin or Skrill for further deposits and withdrawals.

Finance Magnates reached out to both the Central Bank of Kenya and the Capital Markets Authority of Kenya to confirm the move but did not receive any reply as of press time. We will update the story accordingly.

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The final nail on the coffin

The Kenyan regulators are continuously warning against all online FX brokers or money managers that are operating in the country without the proper license and ordering them to cease and desist from trading and onboarding clients from Kenya. However, many are still offerings services.

At present, there are only three regulated brokers in Kenya – EGM Securities, which is the Kenya-based operations of Equiti Group and locally trading as FXPesa; SCFM Limited, trading as Scope Markets; and Pepperstone Markets Kenya Limited.

Now after many warnings, the regulator’s attempt to curb the payment companies’ services seems to be an effective move.

“…fraudulent unregulated entities styling themselves as online foreign exchange (forex) brokers and traders have also emerged,” the central bank stated in a notice published on August 25, 2020. “These entities promise customers huge returns and are not licensed as required…These rogue entities seek to exploit Kenyans and pose Money Laundering and Financing of Terrorism risks to the financial sector.”

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