Wise boss fined £350,000 over tax returns
- Kristo Käärmann was fined £365,651 by the FCA in February 2021
- HMRC added him to their list of public tax defaulters seven months later
The co-founder and CEO of financial technology company Wise has been fined £350,000 for failing to inform the city’s regulator about personal tax issues.
Kristo Käärmann is said to have paid a £500,000 fine but received a 30 per cent reduction due to his cooperation with the Financial Conduct Authority.
It follows a £365,651 fine from the FCA in February 2021 for failing to notify HMRC of a capital gains tax charge after selling shares worth £10m in 2017.
Punishment: Kristo Käärmann, co-founder of financial technology company Wise, fined £350,000 for failing to inform authorities of his tax issues
HMRC added the Estonian-born entrepreneur to their list of defaulters with the public tax authorities seven months later.
Regulators have since launched an investigation into Käärmann, who was worth £1.7 billion according to the latest Sunday Times Rich List.
The FCA said Käärmann “failed to properly consider the significance of the tax issues and failed to notify the FCA despite being aware of them for more than seven months.”
However, it found no “adverse findings” regarding his “continuing fitness and propriety” to perform his current duties as a wise boss and concluded that he did not conduct himself “with a lack of integrity.”
Therese Chambers, joint executive director of enforcement and supervision at the FCA, said: “We, and the public, expect high standards from leaders of financial firms, including candor and openness.
‘It should have been clear to Mr Käärmann that he had to tell us about these issues, which were highly relevant to our assessment of his fitness and decency.’
The Estonian founded Wise in 2011 together with Taavet Hinrikus after the pair became frustrated with the high costs of transferring cash to their home country.
The company’s backers include Virgin Group tycoon Sir Richard Branson, venture capital fund Andreessen Horowitz and Paypal co-founder Peter Thiel.
Wise was valued at £8.75 billion when it listed on the London Stock Exchange three years ago, making it the largest IPO of a technology company in the British capital. However, since then the market capitalization has shrunk to around £7.5 billion.
Last summer, Wise warned that income growth would be slower this financial year, following recent price cuts aimed at attracting more consumers.
In its second quarter results, Wise’s underlying income rose 17 percent year-on-year to £337 million, while customer numbers grew 23 percent to 8.9 million.
Käärmann told investors on Monday: “After several years and full cooperation with the FCA, we have completed this process.
“I remain focused on delivering on the mission for Wise and realizing our long-term vision to be ‘the’ network for the world’s money.”
Sensible shares were 0.4 per cent lower at 732p this morning and have fallen by around 13 per cent since the start of the year.
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