Kristo Kaarmann, CEO and co-founder of Wise.
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LONDON — Kristo Käärmann, billionaire CEO of money transfer company wiseIt was fined £350,000 ($454 million) by the UK’s financial regulator for failing to file tax returns.
Käärmann, who co-founded Wise in 2011 with entrepreneur Taavet Hinrikus, was ordered to pay a hefty fine by the Financial Conduct Authority (FCA) on Monday for breaching the regulator’s senior manager conduct rules.
The FCA said Kaman failed to notify the regulator that he had not paid capital gains tax when he cashed out £10m worth of shares in 2017.
The regulator found he breached Rule 4 of the Senior Executive Conduct Rules, which states: “You must make appropriate disclosures of any information that the FCA reasonably expects to be notified.”
It comes after the Wise boss was separately fined £365,651 by UK tax agency HM Revenue and Customs (HMRC) in 2021 for late submission of tax returns in the 2017/18 tax year.
Carman’s name was added to HMRC’s list of public tax defaulters. His tax liability for the year was £720,495, according to HMRC.
Expect “high standards”
The FCA said on Monday that the tax issues related to its assessment of Käärmann’s fitness and suitability as a senior director of a financial services company between February and September 2021.
The regulator added that despite being aware of the issues more than seven months ago, Kaman failed to consider their significance and notify the FCA.
“We and the public expect financial firm leaders to maintain high standards, including candor and openness,” Therese Chambers, co-executive director of enforcement and oversight, said in a statement Monday.
“It was clear to Mr Carman that he needed to tell us about these issues, which were highly relevant to our assessment of his health and decency.”
Kaman said in a statement on Monday that he remains “focused on delivering on Wise’s mission and achieving our long-term vision.” “After several years of full cooperation with FCA, we have concluded this process,” he said.
Kaman added: “We will continue to build a product and a company that will serve our customers and property owners for decades to come.”
Wise chairman David Wells said the company’s board “continues to take Wise’s regulatory obligations very seriously.”
An internal investigation by Wise’s board of directors in 2021 found that Käärmann was “suitable” to continue in his role at the company.
As a result of the review, the board required Kaman to take “remedial action” to ensure his personal tax affairs are properly managed.
Not as serious as feared
The FCA fine was well below the maximum fine he could have faced.
Kaman could have been fined up to £500,000 for the tax blunder but was eligible for a 30% discount because he agreed to fix the problem.
Earlier this month, Wise reported a 17% increase in “underlying revenue,” which includes cross-border revenue, credit card and other revenue, and interest income.
Wise reiterated that it was targeting a base target of pre-tax margins of 13% to 16% in the medium term due to investments in pricing, adding that this meant it did not have to “make further material progress in lowering pricing in the second quarter.” sexual investment”. half a year.
In a report on Monday, analysts at British investment bank Peel Hunt raised Wise’s full-year pre-tax profit forecast by 15%. They have a price target of £1,000 on the stock and a “buy” rating.
“While Wise has not made any changes to the guidance set out in June 2024, we Significant growth is expected in the near future.
Käärmann and Hinrikus are both Estonian tech entrepreneurs who immigrated to the UK and grew Wise from a scrappy startup into a The payments disruptor is now worth £7.4bn.
They created Wise to provide banks with a low-cost alternative to the hidden fees they charge when moving funds across borders.
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