FCA looks into Wise co-founder following tax omission
UK regulators are looking into the CEO
of fintech company Wise after discovering that he had neglected to pay a
tax bill totaling more than £720,000.
Wise CEO and co-founder Kristo
Kaarmann, who failed to pay the tax bill in 2018, was recently penalized
£365,651 by Her Majesty's Revenue and Customs, the U.K. government agency in
charge of tax collection.
At the time, a company representative
claimed that Kaarmann had filed his individual tax returns for the 2017–2018
tax year after the deadline but that he had subsequently paid the balance due
and "substantial" late filing penalties.
According to a statement released by Wise
on Monday, the UK's Financial Conduct Authority has now started an
investigation into the situation.
Wise said that its board employed outside
attorneys to assist in the investigation into Kaarmann's tax infraction. The
probe was completed in the fourth quarter of 2021, and the FCA was informed of
its findings.
Wise's board chair, David Wells, stated
that the company's management "very seriously" considers Kaarmann's
tax delinquency and the FCA investigation.
“After reviewing the matter late last year
the Board required that Kristo take remedial actions, including appointing
professional tax advisors to ensure his personal tax matters are appropriately
managed,” Wells said. “The
Board has also shared details of its own findings, assessment and actions with
the FCA and will cooperate fully with the FCA as and when they require, while
continuing to support Kristo in his role as CEO.”
Because Wise also provides foreign
payments and stock trading, the regulator has the authority to decide that
Käärmann is unable to hold the position of senior management of an investment
firm.
For Wise and its CEO, the investigation
may have important repercussions. If authorities decide Kaarmann does not pass
the "fit and proper" test, he can be forced to resign and leave the
industry.
On the FCA investigation, a spokesperson
for Wise declined to speak further.
Wise's stock scarcely changed after the
news on Monday. Since making its public debut in July 2021, the company's stock
has dropped precipitously, shedding over 57 percent of its worth.
After its shares were listed on the London
Stock Exchange in July 2021, Wise, originally known as TransferWise, became one
of London's most well-known fintech companies and helped the City.
Käärmann and his co-founder Taavet
Hinrikus founded Wise in 2011.
By tackling hidden foreign exchange fees,
Wise, which competes with companies like PayPal and Western Union, swiftly
established itself as a favorite of the U.K. start-up industry. Since then, the
business has expanded into other facets of finance, such as banking and
investing.
For jobs in the banking section, Hubforjobs.
After the flotation, which initially
valued the firm at close to £9 billion, Käärmann and Hinrikus became
"paper billionaires" for a while. Its worth reached a high of about
£12 billion in September, but has since dropped to just under £4 billion due to
worries about increased cross-border payment rivalry and a general trend away
from rapidly expanding digital companies among investors worldwide.
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