Wiseco-founder and CEO, Kristo Käärmann, has been fined £350,000 by the FCA for violating senior manager conduct rules.
- The FCA’s investigation, initiated in June 2022, uncovered Käärmann’s failure to disclose previous regulatory breaches.
- Käärmann had earlier been fined £365,651 by HMRC for not reporting capital gains tax liabilities from a 2017 share sale.
- His omission was deemed a breach of the UK’s Senior Management Conduct rules, particularly rule four.
- Although the initial fine was higher, it was reduced due to his cooperation in resolving the issue.
The Financial Conduct Authority (FCA) has levied a substantial fine of £350,000 against Kristo Käärmann, co-founder and CEO of Wise, a leading fintech firm. The penalty is the result of his failure to disclose a previous regulatory breach, a significant misstep for an individual in his position. This investigation, launched by the FCA in June 2022, meticulously examined Käärmann’s regulatory compliance, focusing particularly on his non-disclosure of past interactions with HM Revenue and Customs (HMRC).
In February 2021, Käärmann was fined £365,651 by HMRC for deliberately failing to notify the UK tax authorities about capital gains tax liabilities resulting from his sale of £10 million worth of shares in 2017. His omission led to his inclusion on HMRC’s list of public tax defaulters, a move that was expected to be disclosed to the FCA during its assessment of his fitness and propriety.
The FCA articulated Käärmann’s failure to engage candidly with their investigative process as a breach of the UK’s Senior Management Conduct rules, specifically rule four, which mandates the transparent disclosure of any pertinent information. The expectation, as outlined by Therese Chambers, joint executive director of enforcement and oversight at the FCA, was for Käärmann to be forthright about issues that critically impacted the regulator’s evaluation of his suitability for the role.
Despite the potential for a £500,000 penalty, Käärmann’s willingness to cooperate led to a reduction in the fine. This gesture acknowledges his efforts to rectify the situation, although it underscores the importance placed by the FCA on ethical conduct within senior management roles.
Wise, co-founded by Käärmann in 2011, remains a prominent player in international money transfers, having gone public in London in 2021. The company continues to demonstrate robust growth, posting positive quarterly results as it seeks to enhance profitability.
Käärmann’s case underscores the critical importance of transparency and ethical conduct in financial leadership roles.
