Christo Kaarmann, CEO and co-founder of Wise.
Eoin Noonan | Sportsfile | Getty Images
CEO of £3.9bn ($4.8bn) fintech firm Wise is under investigation by UK regulators after the tax authorities found that he had failed to pay a tax bill of over £720,000.
Christo Kaarmann, co-founder of Wise in 2011, recently fined £365,651 from HM Revenue and Customs, the UK government agency responsible for tax collection, for tax evasion in 2018.
At the time, a company spokesperson said Kaarmann filed his personal tax returns for the 2017/18 tax year late, but has since paid what he owes, along with “substantial” penalties for late filing.
According to Wise on Monday, the UK Financial Conduct Authority launched an investigation into the matter. Regulators are looking into whether Kaarmann has failed to meet regulatory obligations and standards.
The FCA declined to comment on the investigation.
Wise said its board has hired outside lawyers to help investigate Kaarmann’s tax wrongdoing. The investigation ended in the fourth quarter of 2021 and the results have been shared with the FCA.
David Wells, chairman of Wise’s board of directors, said company management is “very serious” about Kaarmann’s tax evasion and the FCA investigation.
“Following a review late last year, the Board requested that Christo take remedial action, including the appointment of professional tax advisors to ensure that his personal tax matters are properly managed,” Wells said.
“The Board has also shared details of its own findings, assessments and actions with the FCA and will cooperate fully with the FCA as needed while continuing to support Cristo in his role as CEO.”
The investigation could have serious implications for Wise and its chief executive. Karmann may be forced to resign and stop working in the industry if regulators decide that it does not comply test for “suitability and correctness”.
A spokesman for Wise declined to comment on the FCA’s investigation.
Wise stock barely moved on the news on Monday. The company’s shares have plummeted since its debut in July 2021, losing about 57% of its value.
The wise one who competes with the likes PayPal as well as Western Union, made a name for itself by handling hidden foreign exchange fees and quickly became the darling of the UK startup scene. The company has since expanded into other areas of finance, including banking and investment.