Kristo Käärmann, CEO of Wise, faces a £350,000 fine imposed by the FCA for not reporting significant tax issues.
- The regulatory body fined Käärmann for insufficient disclosure regarding a considerable tax liability with HMRC.
- In 2021, Käärmann was penalised with a substantial tax fine, which led to further scrutiny by the authorities.
- The FCA’s penalty stems from a breach of Senior Management Conduct Rule 4, highlighting disclosure failures.
- Käärmann’s penalty was reduced by 30% after he agreed to settle the matter promptly.
In an authoritative move, the Financial Conduct Authority (FCA) has levied a fine of £350,000 on Kristo Käärmann, the Chief Executive of Wise, for failing to adequately report vital tax matters. Käärmann’s oversight highlights key regulatory expectations for financial leaders, as he neglected to inform the authority of significant tax obligations.
The incident dates back to February 2021, when Kristo Käärmann incurred a tax penalty from HMRC amounting to £365,651. This fine was due to his deliberate omission in notifying HMRC of a capital gains tax obligation following his 2017 sale of shares worth £10 million. The FCA later found his non-disclosure during this period to be critically relevant to evaluating his role’s suitability.
Between February and September 2021, the Financial Conduct Authority assessed Käärmann’s responses concerning his tax issues. They determined that despite being aware of the situation for an extended duration, Käärmann failed to communicate effectively with the FCA about these substantial tax matters.
The FCA’s decision to fine Käärmann is rooted in a breach of Senior Management Conduct Rule 4. This regulation mandates that senior financial managers must openly disclose any information that the FCA might reasonably expect notice of. Käärmann’s failure to do so led to the substantial fine, albeit reduced from an initial £500,000 due to his cooperation in resolving the matter efficiently.
Therese Chambers, the FCA’s joint executive director of enforcement and oversight, highlighted the gravity of the lapse, stating, “We, and the public, expect high standards from leaders of financial firms, including being frank and open.” This sentiment was echoed throughout the proceedings, affirming the expectations of transparency and accountability among leading financial professionals.
The £350,000 fine against Kristo Käärmann underscores the stringent standards expected by the FCA in maintaining transparency and open communication.
