Kristo Käärmann, CEO of Wise, faces a substantial fine by the FCA, marking a significant event in the fintech industry.
- The FCA penalised Käärmann for failing to disclose previous regulatory breaches during their assessment of his suitability.
- In 2021, Käärmann was fined for not informing HMRC about a capital gains tax liability, resulting from a major share sale.
- An investigation was initiated by the FCA in 2022 to examine Käärmann’s adherence to regulatory responsibilities.
- Cooperation with the FCA’s investigation led to a reduction in the original fine amount for Käärmann.
The FCA has imposed a fine of £350,000 on Kristo Käärmann, the CEO of Wise, for breaching a senior manager conduct rule. The regulatory body took action as Käärmann did not disclose his past regulatory breaches while his fitness and propriety were under assessment. His previous run-in with HM Revenue and Customs (HMRC) was significant and should have been acknowledged according to the FCA.
In February 2021, Käärmann was fined £365,651 by HMRC. The fine was for deliberately failing to report a capital gains liability after selling £10 million worth of shares in 2017. This oversight led to him being listed publicly by HMRC as a tax defaulter, a critical detail the FCA expected him to disclose.
The FCA’s investigation, launched in June 2022, scrutinised Käärmann’s regulatory obligations. It found that despite being aware of the significance of his non-disclosure for over seven months, he chose not to resolve the issue in conjunction with the regulator. Such actions breached the UK’s Senior Management Conduct Rule, particularly rule four, which stresses the importance of transparency with the FCA.
Therese Chambers, joint executive director of enforcement and oversight at the FCA, emphasised the expectations of high standards from financial leaders. She stated, “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.”
Although initially set at £500,000, Käärmann’s fine was reduced due to his cooperation with the FCA to address the matter. Wise, co-founded by Käärmann in 2011, continues to operate in the international money transfer sector with reported growth, despite these recent regulatory setbacks.
The significant fine against Kristo Käärmann highlights the critical importance of transparency among leaders of financial institutions.
