FCA investigates Wise co-founder after tax default
The UK’s financial regulator is investigating the co-founder of payments company Wise after he failed to pay his taxes.
Kristo Käärmann was included on HM Revenue and Customs’ list of deliberate tax defaulters in September 2021, after failing to comply with his tax obligations. He failed to pay £720,495 for the 2017-18 tax year and received a fine of £366,000, the tax authority said.
Wise said on Monday that the Financial Conduct Authority (FCA) had “commenced an investigation regarding the regulatory obligations and standards to which Kristo is subject”, after it shared details of its own investigation.
Wise, formerly known as TransferWise, is one of London’s most prominent financial technology, or fintech, firms, after its shares floated on the London Stock Exchange in July 2021, in a boost for the City.
Käärmann and his co-founder, Taavet Hinrikus, started Wise in 2011 after the former struggled to transfer money from a UK bank account to one in their native Estonia without paying extortionate fees.
The regulator has the power to rule that Käärmann is not a fit and proper person to be a senior manager of an investment firm – a role he occupies because Wise offers stock trading as well as international payments.
Käärmann and Hinrikus became paper billionaires for several months after the flotation which initially valued the company at almost £9bn. Its value peaked at nearly £12bn in September, but has since fallen back to about £4bn, amid concerns over growing competition in cross-border payments and a general move away from fast-growing tech businesses by investors around the world.
Käärmann owns 19% of Wise’s shares, a stake now worth about £740m, while Hinrikus owns 9%, valued at about £350m.
David Wells, the Wise chair,
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