Wise CEO under investigation by UK authority over tax default

28 Jun 2022

Wise co-founder and CEO Kristo Käärmann at MoneyConf in the RDS in 2018. Image: Eóin Noonan/MoneyConf via Sportsfile (CC BY 2.0)

Wise’s Kristo Käärmann is being investigated by the FCA as he must be deemed ‘fit and proper’ for his role after he was fined more than £365,000 for failing to pay tax obligations.

The CEO of fintech giant Wise is being investigated by UK regulators after failing to pay tax obligations worth roughly £720,000.

HM Revenue & Customs, which is responsible for the UK collection of taxes, included Kristo Käärmann on its public list of deliberate tax defaulters last September. Käärmann was fined more than £365,000 by the tax authority for failing to pay his obligations for the 2017 to 2018 tax year.

The UK’s Financial Conduct Authority (FCA) is now investigating the matter “regarding the regulatory obligations and standards to which Kristo is subject,” Wise said in a statement.

The investigation is due to Käärmann’s status as an “approved person” who must be deemed “fit and proper” for the role, the Financial Times reports. The Wise board hired external lawyers to investigate Käärmann’s tax violation, and passed the findings onto the FCA.

The investigation may be a serious blow for Wise, which had a record-breaking start to its listing on the London Stock Exchange last year after being valued at £8.75bn. The company’s share price dropped by 2.8pc after details of the investigation emerged yesterday (27 June), the Guardian reports.

Wise’s successful market debut hinted at a turnaround for the fortunes of tech companies on the London Stock Exchange, after Deliveroo’s underwhelming entrance earlier that year.

But the company’s stock has fallen by around 60pc since then, which reflects the broader struggles fintech firms are facing amid rising inflation and economic pressures, according to the Financial Times.

Formerly known as TransferWise before rebranding to Wise last year, the London-based company was founded in 2011 by Käärmann and Taavet Hinrikus.

The company was established as a means to quickly transfer money across borders with lower fees, but has since expanded into other areas of fintech.

Hinrikus was the CEO of the company until 2017. Today (28 June), it was announced that Hinrikus and other European tech entrepreneurs have founded Plural, a new investment platform for early-stage tech start-ups with a starting fund of €250m.

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Wise co-founder and CEO Kristo Käärmann at MoneyConf in the RDS in 2018. Image: Eóin Noonan/MoneyConf via Flickr/Sportsfile (CC BY 2.0)

Leigh Mc Gowran is a journalist with Silicon Republic