The Financial Conduct Authority (FCA) has fined Wise co-founder and CEO Kristo Käärmann £350,000 for breaching a conduct rule.
- The fine relates to Käärmann’s failure to disclose past regulatory issues to the FCA during an assessment.
- In February 2021, he was fined for not reporting a capital gains liability to HMRC after selling shares.
- Käärmann was added to HMRC’s tax defaulters list, prompting the FCA investigation in June 2022.
- His cooperation reduced the original fine from £500,000.
The Financial Conduct Authority (FCA) has imposed a substantial fine on Kristo Käärmann, the CEO and co-founder of Wise, amounting to £350,000. This financial penalty was administered due to Käärmann’s failure to comply with a senior manager conduct rule, which mandates the disclosure of pertinent information during regulatory assessments. Specifically, Käärmann neglected to inform the FCA of previous regulatory breaches, a lapse that became clear during the assessment of his fitness and propriety for his role.
Back in February 2021, Kristo Käärmann was fined £365,651 by HM Revenue and Customs (HMRC) for a distinct violation: failing to notify tax authorities about a capital gains liability. This liability emerged following his sale of shares valued at £10 million in 2017. The non-disclosure led to his addition on HMRC’s public tax defaulters list, a development that inevitably triggered further scrutiny from the FCA.
The FCA launched its investigation into Käärmann in June 2022, focusing on his adherence to regulatory obligations and standards. Notably, despite being aware of the regulatory concerns for a period exceeding seven months, Käärmann did not engage constructively with the FCA, thereby breaching the United Kingdom’s Senior Management Conduct rules. Rule four of these guidelines explicitly states the necessity for appropriate disclosures of information that the FCA would reasonably expect to be notified about.
Therese Chambers, Joint Executive Director of Enforcement and Oversight at the FCA, emphasised the importance of transparency and honesty among financial firm leaders. She commented that it was apparent Käärmann should have disclosed such critical information, which was crucial for the FCA’s assessment of his suitability for leadership positions. Her statement reflects the FCA’s expectations for high standards from those in significant roles within financial institutions.
Interestingly, the original fine proposed for Käärmann was £500,000. However, it was reduced to £350,000 in recognition of his eventual cooperation to resolve the ongoing matter. This adjustment highlights the importance the FCA places on collaboration and compliance, even after initial lapses in adhering to regulatory standards. Wise, co-founded by Käärmann and Taavet Hinrikus in 2011, continues to operate as a significant player in the international money transfer sector, having gone public in London in 2021.
This case underscores the rigorous expectations for transparency and accountability within financial leadership.
