Kristo Käärmann, founder and CEO of the money transfer service Wise, has been fined $453,760 by the Financial Conduct Authority (FCA) for neglecting to inform the regulator about a tax default. The FCA reported on Monday that Käärmann had failed to disclose a previous fine imposed by HM Revenue and Customs (HMRC), which placed him on a public “name and shame” list of individuals who deliberately avoided tax payments, a list typically dominated by small businesses and sole traders.
This ruling concludes a series of regulatory issues stemming from Käärmann’s sale of shares in 2017, a transaction that generated $10 million but resulted in a series of financial and regulatory complications.
Käärmann originally conceived Wise, previously known as TransferWise, while he was working for an accounting firm in London. Frustrated by the high fees involved in transferring money back to Estonia, he coordinated with Taavet Hinrikus to set up a mutual exchange system, sidestepping traditional bank fees. The startup quickly grew, becoming a prominent name in the London tech scene, and its 2021 public listing turned the co-founders into billionaires. Wise currently holds a valuation of $9.7 billion, and Käärmann’s net worth, primarily from his 18% stake, was estimated at $2.2 billion by the Sunday Times this year.
Although the FCA had the authority to question Käärmann’s suitability as a director of regulated businesses, it determined his actions were “careless” rather than intentional or reckless. The issue traces back to Käärmann’s failure to declare his $10 million share sale in September 2017, resulting in a $934,090 tax obligation. Following this oversight, HMRC fined him $474,500 when he neglected to respond to two notices due to a demanding travel schedule. Käärmann promptly settled the fine upon realizing his mistake in February 2021. However, the FCA became aware of the situation later that year after a journalist inquiry, as Käärmann had not notified them about the tax penalty, despite Wise being under FCA regulation for its share dealing and electronic money services.
Käärmann received a 30% reduction on the initial $648,230 fine by cooperating with the investigation early on. He expressed his intent to continue focusing on Wise’s long-term goals, underscoring that the matter had been settled after full cooperation with the FCA.
David Wells, Wise’s chair, confirmed that the company has taken steps to ensure Käärmann’s personal tax matters are now fully resolved.
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