UK’s
Financial Conduct Authority (FCA) has imposed a £350,000 fine on Wise plc CEO
Kristo Käärmann for failing to disclose significant tax issues, marking the
latest development in a prolonged regulatory saga stemming from a 2017 share
disposal.
UK Watchdog Fines Wise CEO
£350,000 over Tax Default Disclosure Failure
The case
originated from Käärmann’s sale of shares worth approximately $10 million in
September 2017, which generated a capital gains tax liability of more than £720,000.
Despite multiple communications from HMRC throughout 2019 and 2020, Käärmann
failed to respond or declare the tax liability.
The FCA’s
investigation revealed that Käärmann breached Senior Management Conduct Rule 4
by failing to notify the regulator about HMRC’s determination of his deliberate
tax default status and subsequent £365,651 penalty.
“We,
and the public, expect high standards from leaders of financial firms,
including being frank and open,” stated Therese Chambers, joint executive
director of enforcement and oversight at the FCA. “It should have been obvious
to Mr Käärmann that he needed to tell us about these issues which were highly
relevant to our assessment of his fitness and propriety.”
The
regulatory action highlights alleged oversight failures during Käärmann’s
tenure as CEO of Wise plc and director of two FCA-regulated firms – Wise Assets
UK Ltd and Wise Payments Ltd. The Authority determined that while Käärmann’s
approach was “careless rather than deliberate or reckless,” his
inaction prevented real-time assessment of his fitness and propriety for senior
management roles.
The
FCA’s penalty calculation followed a structured framework:
Initial
assessment based on relevant income: £207,467Seriousness
level determination:
Level 3 (20%)Final
penalty after 30% settlement discount: £350,000
The fine
could have reached £500,000, but Käärmann received a discount for agreeing to
resolve the matters promptly.
It’s worth
noting that this isn’t the first penalty for the CEO of former TransferWise,
the London-based financial technology company. Her Majesty’s Revenue and
Customs, responsible for tax collection in the UK, also imposed a separate
penalty exceeding £365,000 few years ago.
In 2022,
the FCA began investigating why the CEO of Wise failed to meet regulatory
obligations related to submitting his personal tax returns. Today’s penalty is
a result of that examination.
Wise Hits 8.9 Million
Active Users
A fine in
the hundreds of thousands of pounds is unlikely to significantly impact a
billionaire and his publicly traded company, particularly as the business
continues to expand in both user base and transaction volumes.
In its
second-quarter report for fiscal year 2025, Wise
reported a 23% year-over-year (YoY) growth in active customers, reaching
8.9 million, mainly due to recommendations from existing users. This increase
in users contributed to a 20% rise in cross-border transaction volume, totaling
£35.2 billion for the quarter.
Despite
recent fee reductions, Wise’s underlying income rose by 17% YoY to £337.0
million in Q2. For the first half of FY25, the company reported a 19% growth in
underlying income and reaffirmed its full-year growth guidance of 15–20%.
“We remain
focused on our mission of building the best way to move and manage the world’s
money,” Kristo Käärmann, Co-founder and CEO of Wise, commented on
the results. “This
will take time to fully achieve, but we are pleased with the progress made
during the quarter, especially the additional regulatory approvals we have
received in key markets.
The company
also highlighted several regulatory achievements, including
expanded capabilities for outward transfers from India, an Australian Financial Services
License for Investments, and a Payments Institutions license in Brazil.
This article was written by Damian Chmiel at www.financemagnates.com.
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