FCA to probe Wise co-founder Käärmann over deliberate tax default

By John Reynolds on Monday 27 June 2022

Digital Banking

The probe by the UK financial regulator follows Kristo Käärmann being named last year on a list of individuals that HM Revenue & Customs (HMRC) fined for deliberately defaulting on his taxes.

FCA to probe Wise co-founder Käärmann over deliberate tax default
Image source: Wise co-founder and CEO Kristo Käärmann.

The FCA is investigating Wise co-founder and CEO Kristo Käärmann after he deliberately failed to pay his taxes.

The probe by the UK financial regulator follows Käärmann being named last year on a list of individuals that HM Revenue & Customs (HMRC) fined for deliberately defaulting on his taxes.

The fintech founder failed to pay £720,495 for the 2017-18 tax year and received a fine of £366,000, the tax authority said.

International transfer businesses Wise said it had then undertaken its own investigation.

Today’s announcement will be a blow to Wise, which is a poster boy for the UK fintech sector.

In a stock market announcement today, Wise said: “Following the inclusion of the CEO's name in this list, the board of Wise conducted an investigation with support from external legal counsel. 

“The investigation concluded in Q4 2021, and the board shared details of its findings, assessment and actions with the FCA.

“In relation to this matter, the FCA has commenced an investigation regarding the regulatory obligations and standards to which Kristo is subject. Kristo intends to cooperate fully with the FCA in its investigation.

Wise chair David Wells said: "The board takes Kristo's tax default and the FCA's investigation very seriously. 

“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. 

“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."

The FCA has powers to rule that Käärmann is not a fit and proper person to be a senior manager of an investment firm, a role he has as Wise, previously known as TransferWise, offer stock trading along with international payments, according to the Guardian.

Käärmann owns around a fifth of TransferWise, which was founded in 2011 with his co-founder Taavet Hinrikus.

Last year, Wise went public on the London Stock Exchange, securing a valuation of well over £7bn for the fintech founded in 2011.

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