Wise cofounders Kristo Kaarmann and Taavet Hinrikus.
Kristo Kaarmann, the cofounder and CEO of money transfer firm Wise, was fined £350,000 ($453,970) for failing to inform the U.K.’s financial regulator of his personal tax issues.
The Financial Conduct Authority (FCA) said Kaarmann did not notify the regulator of a “significant fine” he had paid to HM Revenue and Customs in February 2021 and his addition to the agency’s public tax defaulters list in September that same year.
The FCA said Kaarmann has an obligation to notify it of any matters that may be significant to his ‘fitness and propriety to perform his senior manager role,” but he had failed to do so for seven months. The watchdog only became aware of Kaarmann’s tax issues after his name was made public on the tax defaulters list and a journalist reached out to the FCA for comment.
Kaarmann’s tax troubles stem from a £10 million share sale in 2017 when he failed to inform HMRC of the capital gains tax liability he had incurred. Selling the equities had left him with a tax bill of £720,425.
The financial regulator said Kaarmann’s actions were “careless, as opposed to deliberate or reckless.” He could have been fined £500,000, but qualified for a 30% discount after he agreed to resolve the matter.
Wise said its board had conducted its own investigation and concluded that Kaarmann remained fit and proper to continue in his roles at the fintech.
“We’re pleased that the FCA’s conclusions are consistent with Wise’s own assessment in 2021, and that the matter is now closed in its entirety,” Wise’s Chairman David Wells said in a separate statement.
Kaarmann said: “After several years and full cooperation with the FCA, we have brought this process to a close. I remain focused on delivering the mission for Wise and achieving our long-term vision for being ‘the’ network for the world’s money.”
Wise was established by Kaarmann and his fellow cofounder Taavet Hinrikus in 2011. The pair said they were frustrated by the fees their banks charged when sending money between London—where they were working—and their native Estonia. Their company, formerly known as TransferWise, was set up to offer cheaper and faster cross-border transfers.
In 2021, Wise went public on the London Stock Exchange to great fanfare, turning its cofounders into Estonia’s first two billionaires. Today, the fintech operates in more than 160 countries. Wise said it transferred £118.5 billion around the world for 12.8 million customers last year.
