PayPal has frozen funds held in numerous Kenyan accounts and permanently closed others, prompting widespread frustration among freelancers, small businesses and creatives who rely on the platform for overseas payments.
The US-based payments giant is requiring users receiving money from abroad to provide extensive verification, including work contracts, bank statements and proof of a physical home address.
Those who fail to comply face restrictions preventing them from sending or withdrawing money for at least six months. Accounts remaining non-compliant beyond that period are deactivated permanently, with balances potentially held for up to 180 days to cover possible chargebacks or liabilities.
Users can still view their transaction history and balances, but are effectively locked out of using the funds. Even after restoration, future incoming payments may be subject to holds of up to 21 days.
The main issue
The biggest hurdle for many is proving a physical address. PayPal requests formal documentation tied to a structured street address, a system common in the U.S. and Europe but far less prevalent in Kenya.
Many neighbourhoods in Kenya, including in major cities like Nairobi and Kisumu, rely on informal landmarks and directions rather than standardized addressing.
One affected freelance writer reported being unable to access roughly $190 (about Ksh24,500) paid by a U.K. client despite submitting matching ID documents and a contract.
Instead of releasing the funds for transfer to his local bank or M-Pesa, PayPal permanently barred the account, citing suspicious activity.
Anti-money laundering drive – or familiar pattern?
There is a stated reason behind the crackdown. PayPal describes the measures as standard efforts to combat money laundering and fraud.
The decision comes as Kenya remains on the Financial Action Task Force’s “grey list” since February 2024, indicating heightened monitoring for gaps in anti-money laundering and counter-terrorism financing controls.
The FATF “grey list” officially refers to jurisdictions under increased monitoring by the Financial Action Task Force, the premier global watchdog establishing international standards to protect the global financial system which was created by the G7 nations of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
During such a time, international financial institutions such as PayPal often apply extra scrutiny to transactions linked to grey-listed jurisdictions.
The company screens accounts against watch lists and reports suspicious activity—such as unusually large or sudden inflows into previously dormant accounts—to local financial intelligence units.
The Kenya problem
Challenges with PayPal in Kenya are not new, though. Users and local media have documented years of complaints involving account restrictions, extended fund holds and limited communication.
PayPal operates in Kenya without a physical presence on the continent, relying instead on local partners such as Equity Bank for direct withdrawals and integrations with services like M-Pesa.
Earlier incidents include widespread temporary locks on accounts linked to mobile-money services shortly after integrations launched in mid-2018. This later turned into an obvious 21-day wait for you to withdraw funds from your PayPal to M-Pesa.
A 2023 survey of Kenyan entrepreneurs highlighted that a significant portion of respondents experienced prolonged withholding of funds, with some never regaining access.
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