August 15, 2022

City watchdog probes Wise boss Kristo Kaarmann over tax affairs

City watchdog probes Wise boss over tax affairs: Billionaire Kristo Kaarmann labelled a deliberate defaulter after failing to pay £720,495 bill

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The City watchdog has launched an investigation into the founder and chief executive of money transfer giant Wise.

The Financial Conduct Authority is looking into the affairs of Kristo Kaarmann after he was last year labelled ‘deliberate tax defaulter’ by the taxman.

The 41-year-old billionaire failed to pay a £720,495 tax bill for 2017-18 and was fined £365,651.

Probe: Wise chief exec Kristo Kaarmann (pictured) was last year labelled ‘deliberate tax defaulter’ by the taxman

Wise conducted its own investigation after Kaarmann was included on the tax defaulters list in September 2021.

The company passed its findings to the FCA, which has in turn launched an investigation.

The tech company said yesterday the FCA probe will examine ‘the regulatory obligations and standards to which Kaarmann is subject’.

Wise said Kaarmann will ‘cooperate fully’ with the investigation.

Shares fell 2.2 per cent, or 8.4p, to 373.1p yesterday.

Wise chairman David Wells said: ‘The board takes Kaarmann’s tax default and the FCA’s investigation very seriously.’

Wells said the firm’s directors will also cooperate with the investigation and will ‘continue to support Kaarmann in his role as chief executive’.

The FCA has powers over the financial services sector and holds senior managers to a set of rules.

They include acting with integrity, due skill, care and diligence and observing ‘proper standards of market conduct’.

In order to have so-called ‘approved person’ status, the FCA must see Kaarmann as ‘fit and proper’ to do his job. The investigation could see the Estonian entrepreneur banned from acting as a company director or hit with a fine.

Questions were raised over whether the billionaire was fit and proper last year when he was fined by HMRC for intentionally defaulting on his taxes.

Slump: Wise listed its shares on the London Stock Exchange last year with a value of £9bn. It has since been hit by the global selloff of tech stocks and is now worth £3.8bn

Slump: Wise listed its shares on the London Stock Exchange last year with a value of £9bn. It has since been hit by the global selloff of tech stocks and is now worth £3.8bn

Slump: Wise listed its shares on the London Stock Exchange last year with a value of £9bn. It has since been hit by the global selloff of tech stocks and is now worth £3.8bn

At the time a spokesman said Kaarmann had since completed his returns, paid penalties and ‘devoted more time to keeping his personal admin in order’.

Kaarmann and wealthy Estonian businessmen Taavet Hinrikus – founded Wise, which was then called TransferWise, in 2011 to transfer money around the world more cheaply and easily. He is still its biggest shareholder with an 18.24 per cent stake.

The company listed its shares on the London Stock Exchange last year with a value of £9billion.

It has since been hit by the global sell-off of tech stocks and is now worth £3.8bn.

Past bans dished out by the FCA include one to fund manager Jonathan Burrows, who avoided £43,000 worth of train fares over five years.

He was given a lifetime ban from working in the City in 2014 after the FCA found his conduct ‘fell short’ of the standards it expected, and admitted what he did was ‘foolish’.

In 2018 the FCA fined former Barclays chief executive Jes Staley £642,430 after he tried to uncover a whistleblower who had reported concerns within the bank.

Staley, 65, quit last year after being shown the results of another FCA probe into his alleged links to the late paedophile Jeffrey Epstein. The findings are yet to be made public.

Wise is due to publish full-year results today with analysts expecting a jump in profits from £41million in 2020 to £78million in 2021.

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