Kippa reportedly loses ₦30 million to internal fraud

Kippa reportedly lost 30 million naira to internal fraud

The News:

• Kippa reportedly lost ₦30 million in internal fraud involving unauthorized withdrawals.
• The incident occurred within their now-defunct agency banking product, KippaPay.
• A senior manager is suspected but has been released on bail.
• Kippa is reviewing its internal controls and security measures.
• Experts urge fintech companies to prioritize robust compliance systems.
• The fraudlent transaction raises concerns about internal controls and agency banking risks.

Kippa, a leading Nigerian fintech platform facilitating financial management for small businesses, has reportedly suffered a ₦30 million loss due to internal fraud. The incident involved their now-discontinued agency banking product, KippaPay.

The fraud occurred for at least four (4) months but was discovered in November, one month after the company shut down Kippa Pay, and sacked 40 workers within the company.

According to sources, an unidentified senior manager within the company engaged in unauthorized withdrawals of large sums of money, bypassing standard point-of-sale (PoS) procedures, following the announcement of that shutdown which led to massive withdrawals of funds from customers. In the ensuing rush to withdraw funds, the company noticed that a customer without a POS was also withdrawing large sums of money. That person was the unidentified senior manager.

Although, an internal investigation launched in November 2023 uncovered the discrepancy, revealing ₦30 million traced to the manager's personal account. The manager was subsequently arrested but has since been released on bail.

Kippa officials declined to comment further on the matter, citing ongoing legal proceedings. However, it is understood that the company is reviewing its internal controls and security measures to prevent similar incidents in the future. The company also emphasized its commitment to safeguarding user funds and maintaining transparency.

News of the fraud has raised concerns about internal control practices within Nigerian fintech startups, which have experienced rapid growth in recent years.

Experts urge fintech companies to prioritize robust internal compliance systems and regular audits to minimize vulnerability to internal fraud.

The incident also sheds light on the risks associated with agency banking, a popular service in Nigeria that allows non-bank agents to offer basic financial services. Kippa has since shut down KippaCash due to this incident and other operational challenges.

The impact of this fraud on Kippa’s reputation and future operations remains to be seen. However, it serves as a cautionary tale for Nigeria’s burgeoning fintech sector, highlighting the importance of robust internal controls and transparency in building trust with users and investors.