The UK’s financial regulator is investigating the co-founder of the payment company Wise after he failed to pay his taxes.
Kristo Käärmann was included in the HM Revenue and Customs list of intentional tax evaders in September 2021 after failing to meet his tax obligations. He did not pay £ 720,495 for the 2017-18 tax year and received a fine of £ 366,000, tax authorities said.
Wise said Monday that the Financial Conduct Authority (FCA) has “launched an investigation into the regulatory obligations and standards to which Christo is subject” after sharing details of its own investigation.
Wise, formerly known as TransferWise, is one of London’s most famous financial technology or fintech companies, after its shares were traded on the London Stock Exchange in July 2021, as a boost for City.
Kjaarman and his co-founder Taavet Hinrikus launched Wise in 2011 after the former struggled to transfer money from a bank account in the UK to an account in his native Estonia without paying extortionate fees.
The regulator has the power to rule that Käärmann is not the right and suitable person to be a senior manager of an investment firm – a role he plays because Wise offers stock trading as well as international payments.
Käärmann and Hinrikus became paper billionaires a few months after the tax, which the company initially estimated at almost £ 9 billion. Its value peaked at nearly £ 12 billion in September, but has fallen to around £ 4 billion since then, amid fears of growing competition in cross-border payments and a general shift away from emerging technology businesses from investors around the world.
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Käärmann owns 19% of Wise shares, a stake worth around £ 740 million, while Hinrikus owns 9% valued at around £ 350 million.
David Wells, chairman of Wise, said: “The board takes Christo’s tax default and the FCA investigation very seriously. After reviewing the issue late last year, the board asked Christo to take corrective action, including appointing professional tax advisers to ensure that his personal tax issues are properly managed.
“The board also shared details of its own findings, evaluation and actions with the FCA and will cooperate fully with the FCA when and when they require, while continuing to support Christo in his role as CEO.
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