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.


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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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