FCA investigates Wise CEO Kristo Kaarmann regarding tax evasion

Kristo Kaarmann, CEO and co-founder of Wise.

Eoin Noonan | Sportsfile | Getty pictures

The CEO of the fintech company Wise of 3.9 billion pounds (4.8 billion dollars) is being investigated by British regulators after the tax authorities found that he failed to pay a tax bill worth more than 720,000 pounds.

Kristo Kaarmann, who co-founded Wise in 2011, was recently fined £ 365,651 by Her Majesty’s revenue and customs – the UK government department responsible for collecting taxes – for failing to pay the 2018 tax bill.

At the time, a spokesman for the company said that Kaarmann had submitted his personal tax returns for the tax year 2017/18 too late, but has since paid what he owed along with “significant” penalties for late submission.

The UK Financial Conduct Authority has now opened an investigation into the case, according to a statement from Wise on Monday. Regulators are looking at whether Kaarmann failed to meet regulatory obligations and standards.

The FCA declined to comment on the investigation.

Wise said the board hired external lawyers to help investigate Kaarmann’s tax evasion. The investigation was completed in the fourth quarter of 2021, and the findings were shared with the FCA.

David Wells, chairman of Wise, said the company’s management takes Kaarmann’s tax evasion and the FCA investigation “very seriously.”

“After reviewing the case late last year, the board demanded that Kristo take remedial action, including appointing professional tax advisors to ensure that his personal tax matters are handled properly,” Wells said.

“The board has also shared details of its own findings, assessments and actions with the FCA and will cooperate fully with the FCA whenever and wherever they require, while continuing to support Kristo in his role as CEO.”

The investigation could have significant consequences for Wise and its CEO. Kaarmann may be forced to retire and stop working in the industry if regulators state that he does not pass the “fit and proper” test.

A spokesman for Wise declined to comment further on the FCA investigation.

Shares in Wise barely moved on the news on Monday. The company’s share has fallen sharply since its debut in July 2021, losing around 57% of its value.

Wise, which competes with the likes of PayPal and Western Union, made a name for itself by tackling hidden fees in foreign currency and quickly became a girlfriend in the British start-up scene. The company has since branched out into other financial areas, including banking and investments.