The Financial Conduct Authority (FCA), the United Kingdom’s financial industry watchdog, has opened an investigation into the tax violation by Kristo Kaarmann, the Chief Executive Officer of Wise.
Wise, formerly called TransferWise, is a London-based financial technology company.
In a list first published in September 2021, the FCA listed Kaarmann among those it had labelled as 'deliberate tax defaulters'.
According to the list, Kaarmann defaulted on £720,495 between April 6, 2017 and April 5, 2018.
The CEO of Wise was subsequently fined £365,651 by Her Majesty’s Revenue and Customs, a non-ministerial department of the UK Government responsible for the collection of taxes, among other duties.
However, according to a spokesperson for Kaarmann, the Estonian-born billionaire was late in submitting his personal tax returns despite several reminders from the tax authority.
“His tax returns have since been completed, and he paid substantial late filing penalties,” the spokesperson was quoted to have said.
Nonetheless, the FCA with its investigation wants to find out whether Kaarmann failed to meet regulatory obligations and standards, CNBC reports.
Cooperation with the FCA
The outlet reported that Wise in a statement said its Board of Directors (BOD) shared its findings on the matter with the UK watchdog.
David Wells, the Chairman of BOD at Wise, said the company tasked Kristo to take up some remedial measures.
These measures, among others, included hiring professional tax advisors to efficiently manage his personal tax matters.
Wise, which posted a 34% year-on-year jump in its revenue for the third quarter of the fiscal year of 2022, said it will fully cooperate with the FCA.
Additionally, the fintech company said it is supporting Kaarmann in his capacity as the company’s Chief Executive.
Meanwhile, Wise recently partnered with Max, an Israeli payments firm, to open up the latter's customers “to cheaper, faster transfers abroad at their fingertips from the convenience of the Max app.”
Wise, which made the announcement in April, said the collaboration will allow Max customers to send money abroad in 32 currencies such as the United States dollar, Euro, Pound Sterling and Canadian dollar.
Furthermore, the company in February disclosed plans to hire 150 employees to man its office in Singapore. The number almost doubles its current headcount in the Asia Pacific hub.
