A Nigerian-born U.S.-based fintech company that transferred millions of dollars from the U.S. to Africa has admitted that it failed to adequately guard against money laundering, U.S. Attorney for the Northern District of Texas Chad E. Meacham announced on July 7.
Ping Express U.S. LLC pleaded guilty to failure to maintain an effective anti-money laundering program. The company was co-founded by the Nigerian duo Anslem Oshionebo (CEO) and Opeyemi Odeyale (COO).
One of its founders, Odeyale, is a known angel investor who most notably made an early investment in the fintech startup, Bankly, which went on to land a USD 2 M seed round last year. He had revealed his interests in Bankly in an interview with WeeTracker in 2019.
Odeyale also boasts a career as a finance professional who has completed over USD 2 B in acquisitions, divestitures, and joint ventures for private equity companies, alongside an endeavour in remittance services in the form of Ping which appears to have now become a subject of trouble.
According to court documents, Ping – which was licensed to transmit money but was not licensed to conduct currency exchange – charged U.S. customers a fee to remit money to beneficiaries in Nigeria and other African nations.
By law, Ping was required to report any suspicious transactions to regulators. In plea papers, it admitted that it failed to file a single report over a three-year period, despite a significant amount of suspicious customer activity.
The company outlined its anti-money laundering policy in a memo to state regulators, claiming it would cap first-time customer transactions at USD 499.00, cap daily transactions at USD 3 K, and cap monthly transactions at USD 4.5 K. However, in plea papers, the company admitted it allowed more than 1,500 customers to violate these rules. In one instance, Ping allowed a customer to remit more than USD 80 K in a single month – more than 17 times the purported limit.
Ping also admitted that it conducted money transmission business in states in which it was not licensed to do so, including Nevada, New Jersey, Utah, West Virginia, and Connecticut. The company claimed to have software that could detect and deter transmissions initiated in “unlicensed” states, but in reality, it admitted, the program didn’t function. In its summaries to state regulators, Ping chose to include a column labeled “IP Location,” but only recorded states in which Ping was properly licensed: Texas, Maryland, Georgia, Washington, and Washington, DC.
In less than three years, the company transmitted more than USD 167 M overseas, including USD 160 M transmitted to Nigeria. The company admitted it failed to seek sufficient details about the sources or purposes of the funds involved in the transactions, or the customers initiating the transmissions.
Three individuals – including two of Ping’s top customers – previously pleaded guilty to transmitting illegally-derived funds through Ping.
One, Collins Orogun, admitted last week that he accepted a fee in exchange for transferring money for “romance scam” fraudsters and other criminals. In one instance, an Indiana woman sent USD 15 K to “Carson Jacks,” a purported oil roughneck in the Gulf of Mexico she fell in love with online, after he told her he’d contracted malaria. In another, a second Indiana woman sent USD 6.3 K to “Thomas Ken,” a purported Irish ship captain she fell in love with online, to fix his ship.
In two years, Orogun received more than USD 1.3 M in cash, cashier’s checks, and wires into several U.S. bank accounts he controlled, and then quickly moved more than USD 1 M of the funds to Africa through Ping. He faces up to 20 years in federal prison and is set to be sentenced on Jan. 23, 2023.
Ping CEO Oshionebo and Ping COO Odeyale also pleaded guilty to failure to maintain an effective anti-money laundering program. Ping’s IT/ Business Development Manager, Aleoghena Okhumale, pleaded guilty to knowingly transmitting illegally-derived funds. The CEO and COO were recently each sentenced to 27 months in federal prison, while the IT/Business Development Manager received a prison sentence of 42 months.
Before now, Odeyale had largely identified as the co-founder of Ping Express; a fintech company that he claims to have grown to a multi-million-dollar profile in less than 3 years and serving 31 countries.
He also identifies as a seasoned finance professional with over 18 years’ experience having served as Assistant Vice President of Barclays Bank Plc until he co-founded Ping Express. Before joining Barclays, he had worked with PricewaterhouseCoopers, JP Morgan, and BNP Paribas. It appears this wealth of experience did not stop things from souring to this point, nor did it arrest the damage.
The company itself now faces five years of probation and a fine of up to USD 500 K. Sentencing has been set for Dec. 19, 2022.
Homeland Security Investigation’s Dallas Field Office conducted the investigation, assisted by the Texas Department of Banking. Assistant U.S. Attorney John de la Garza is prosecuting the case.
There has been heightened noise around money laundering in the African fintech ecosystem of late, with several court courses in Kenya alleging a number of Nigerian startups are implicated in an elaborate fraudulent scheme in Kenya. The startups in question continue to hold firm in their position that they were not involved in any such wrongdoing.
Feature Image Credits: ElevateX