The Financial Conduct Authority has fined Wise plc CEO Kristo Käärmann £350,000 following an investigation into a tax issue.
The financial watchdog said Käärmann, also senior manager of Wise Assets UK Ltd, had been “careless” in breaching a senior manager conduct rule.
The Estonian-born billionaire failed to let the FCA know that he had been previously fined £365,651 by HM Revenue & Customs in 2021 for deliberate non-payment of a capital gains tax liability of £720,425.80 after he sold shares worth £10 million in 2017.
His spokesman said he “forgot” to make the payment while HMRC subsequently added Käärmann to its public tax defaulters list.
“Between February 2021 and September 2021, these matters, including the circumstances surrounding them, were relevant to the FCA’s assessment of Mr Käärmann’s fitness and propriety,” stated the FCA.
“Mr Käärmann failed to appropriately consider the significance of the tax issues and notify the FCA, despite being aware of them for over seven months.”
Käärmann would have been fined £500,000, but he agreed to resolve the matters and so qualified for a 30% discount.
Therese Chambers, joint executive director of enforcement and oversight at the FCA, said: “We, and the public, expect high standards from leaders of financial firms, including being frank and open.
“It should have been obvious to Mr Käärmann that he needed to tell us about these issues which were highly relevant to our assessment of his fitness and propriety.”
Käärmann co-founded online money transfer business Wise as TransferWise in 2010. It went public in 2021 in an £8 billion IPO.
In a notice to the London Stock Exchange, Käärmann stated: “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. We continue to build a product and a company that will serve our customers and owners for the decades to come.”
David Wells, chair at Wise plc, added: “The board continues to take Wise’s regulatory obligations very seriously. 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.
“Following the inclusion of Kristo’s name on HMRC’s list in September 2021, the board conducted its own investigation and assessed that Kristo remained fit and proper to continue in his roles at Wise.
“The board also required him to take remedial actions to ensure that his personal tax affairs are appropriately managed and is satisfied that these actions were taken.”