Kristo Kaarmann, CEO and co-founder of Wise.
Eoin Noonan | Sports File | Getty Images
The CEO of £3.9 billion ($4.8 billion) fintech Wise is under investigation by UK regulators after tax authorities found he failed to pay a tax bill worth over £720,000.
Kristo Kaarmann, co-founder of Wise in 2011, was recently fined £365,651 by Her Majesty’s Revenue and Customs – the UK government agency responsible for collecting taxes – for failing to comply with the tax bill in 2018.
At the time, a company spokesman said Kaarmann late-filed his personal tax returns for the 2017-18 tax year but has since paid off his debt along with “substantial” late-filing penalties.
The British Financial Conduct Authority has now launched an investigation into the matter, Wise announced on Monday. The supervisory authorities check whether Kaarmann has not fulfilled the legal obligations and standards.
The FCA declined to comment on the investigation.
Wise said his board hired outside attorneys to help investigate Kaarmann’s tax violation. The investigation was completed in the fourth quarter of 2021 and its findings were reported to the FCA.
Wise CEO David Wells said the company’s management took Kaarmann’s tax arrears and the FCA investigation “very seriously”.
“Following review of the matter late last year, Kristo’s board requested remedial action, including the appointment of professional tax advisors, to ensure that his personal tax affairs are properly managed,” Wells said.
“The Board has also provided FCA with details of their own findings, assessments and actions and will fully cooperate with FCA as needed, while continuing to support Kristo in his role as CEO.”
The investigation could have significant implications for Wise and its CEO. Kaarmann could be forced to resign and stop working in the industry if regulators decide he doesn’t pass the “fit and proper” test.
A Wise spokesman declined to comment further on the FCA investigation.
Wise’s shares were little on the news Monday. The company’s stock has fallen sharply since its debut in July 2021, losing around 57% of its value.
Wise, which competes with PayPal and Western Union, made a name for itself by cracking down on hidden fees in forex trading and quickly became a darling of the UK start-up scene. The company has since branched out into other finance areas, including banking and investing.