UK’s
Financial Conduct Authority (FCA) has imposed a £350,000 fine on Wise plc CEO
Kristo Käärmann for failing to disclose significant tax issues, marking the
latest development in a prolonged regulatory saga stemming from a 2017 share
disposal.
UK Watchdog Fines Wise CEO
£350,000 over Tax Default Disclosure Failure
The case
originated from Käärmann’s sale of shares worth approximately $10 million in
September 2017, which generated a capital gains tax liability of more than £720,000.
Despite multiple communications from HMRC throughout 2019 and 2020, Käärmann
failed to respond or declare the tax liability.
The FCA’s
investigation revealed that Käärmann breached Senior Management Conduct Rule 4
by failing to notify the regulator about HMRC’s determination of his deliberate
tax default status and subsequent £365,651 penalty.
“We,
and the public, expect high standards from leaders of financial firms,
including being frank and open,” stated Therese Chambers, joint executive
director of enforcement and oversight at the FCA. “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.”
The
regulatory action highlights alleged oversight failures during Käärmann’s
tenure as CEO of Wise plc and director of two FCA-regulated firms – Wise Assets
UK Ltd and Wise Payments Ltd. The Authority determined that while Käärmann’s
approach was “careless rather than deliberate or reckless,” his
inaction prevented real-time assessment of his fitness and propriety for senior
management roles.
The
FCA’s penalty calculation followed a structured framework:
- Initial
assessment based on relevant income: £207,467 - Seriousness
level determination:
Level 3 (20%) - Final
penalty after 30% settlement discount: £350,000
The fine
could have reached £500,000, but Käärmann received a discount for agreeing to
resolve the matters promptly.
It’s worth
noting that this isn’t the first penalty for the CEO of former TransferWise,
the London-based financial technology company. Her Majesty’s Revenue and
Customs, responsible for tax collection in the UK, also imposed a separate
penalty exceeding £365,000 few years ago.
In 2022,
the FCA began investigating why the CEO of Wise failed to meet regulatory
obligations related to submitting his personal tax returns. Today’s penalty is
a result of that examination.
UK’s
Financial Conduct Authority (FCA) has imposed a £350,000 fine on Wise plc CEO
Kristo Käärmann for failing to disclose significant tax issues, marking the
latest development in a prolonged regulatory saga stemming from a 2017 share
disposal.
UK Watchdog Fines Wise CEO
£350,000 over Tax Default Disclosure Failure
The case
originated from Käärmann’s sale of shares worth approximately $10 million in
September 2017, which generated a capital gains tax liability of more than £720,000.
Despite multiple communications from HMRC throughout 2019 and 2020, Käärmann
failed to respond or declare the tax liability.
The FCA’s
investigation revealed that Käärmann breached Senior Management Conduct Rule 4
by failing to notify the regulator about HMRC’s determination of his deliberate
tax default status and subsequent £365,651 penalty.
“We,
and the public, expect high standards from leaders of financial firms,
including being frank and open,” stated Therese Chambers, joint executive
director of enforcement and oversight at the FCA. “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.”
The
regulatory action highlights alleged oversight failures during Käärmann’s
tenure as CEO of Wise plc and director of two FCA-regulated firms – Wise Assets
UK Ltd and Wise Payments Ltd. The Authority determined that while Käärmann’s
approach was “careless rather than deliberate or reckless,” his
inaction prevented real-time assessment of his fitness and propriety for senior
management roles.
The
FCA’s penalty calculation followed a structured framework:
- Initial
assessment based on relevant income: £207,467 - Seriousness
level determination:
Level 3 (20%) - Final
penalty after 30% settlement discount: £350,000
The fine
could have reached £500,000, but Käärmann received a discount for agreeing to
resolve the matters promptly.
It’s worth
noting that this isn’t the first penalty for the CEO of former TransferWise,
the London-based financial technology company. Her Majesty’s Revenue and
Customs, responsible for tax collection in the UK, also imposed a separate
penalty exceeding £365,000 few years ago.
In 2022,
the FCA began investigating why the CEO of Wise failed to meet regulatory
obligations related to submitting his personal tax returns. Today’s penalty is
a result of that examination.
This post is originally published on FINANCEMAGNATES.
