The British financial regulatory authority, Financial Conduct Authority (FCA), has fined the CEO of Wise, Kristo Käärmann, £350,000. The reason for the fine was a breach of conduct rules and failing to inform the FCA about significant tax issues. Despite this sanction, Käärmann continues to serve in his position as CEO of the leading fintech company.
In 2021, a tax authority found that Käärmann had intentionally ignored a tax liability of £720,495 related to a stock sale in 2017. This non-reporting to HM Revenue & Customs initially resulted in a fine of £365,651, which was reduced to £350,000 through an early settlement. The FCA emphasized that Käärmann did not adequately assess the importance of the tax issues and had not informed the authority despite knowing about it for over seven months.
Therese Chambers, joint Executive Director of the FCA for Enforcement and Supervision, commented on the case: "It should have been obvious to Mr. Käärmann to inform us about these issues, which were of great significance for our assessment of his suitability and integrity." Despite the violation and the fine, the FCA clarified that no negative conclusions were drawn regarding Käärmann's "continuing suitability and integrity.
David Wells, Chairman of Wise, confirmed that the company conducted its own investigation and concluded that Käärmann can continue in his role. This is possible because he has taken measures to properly address his personal tax matters. "We are confident that Kristo can continue to successfully fulfill his leadership role at Wise," Wells stated.
The comparison with other cases, such as that of Jes Staley at Barclays, shows that the FCA considers Käärmann's violations to be less severe. While Staley was subjected to a higher fine and a professional ban, Käärmann was able to retain his position despite his misconduct. This underscores the FCA's nuanced assessment regarding the nature and extent of the violations.
Käärmann commented on the incident himself: "After several years and full cooperation with the FCA, we have concluded this process. I remain focused on fulfilling Wise's mission." This statement highlights his determination to continue pursuing the company's goals despite the financial penalties.
The incident highlights the importance of compliance and transparency among leaders in the financial industry. While the fine puts financial pressure on Wise, the case also demonstrates how crucial it is to take regulatory requirements seriously and communicate proactively.
