The billionaire boss of payments company Wise has been fined by the City watchdog after failing to declare an “obvious” tax liability on a £10m share sale.
Kristo Käärmann should have told the Financial Conduct Authority (FCA) about his dealings with tax officials before his name appeared on a public list of tax defaulters, an investigation has found.
The fiasco was “relevant” to assessments of whether Mr Käärmann was “fit and proper” to be a company director, the FCA said.
Mr Käärmann had been ordered to pay a fine of £350,000 over the matter. It is his second fine, following an earlier penalty from HMRC.
Therese Chambers, joint executive director of enforcement and oversight at the FCA, said: “We, and the public, expect high standards from leaders of financial firms, including being frank and open.
“It should have been obvious to Mr Käärmann that he needed to tell us about these issues which were highly relevant to our assessment of his fitness and propriety.”
Mr Käärmann was liable to pay £720,425.80 in capital gains tax following the sale of Wise shares in 2017.
However, he failed to disclose the liability to HM Revenue & Customs and then ignored letters from the authority regarding the sum he was due to pay.
The tech boss, who is worth $1.8bn (£1.4bn) according to Forbes, was subsequently found to have “deliberately” avoided tax and told to pay a fine of £365,651 in February 2021.
He was also publicly “named and shamed” on an official list of deliberate tax defaulters in September 2021, a fact that was first reported by The Telegraph. The FCA only became aware of the matter after Mr Käärmann’s name appeared on the list.
The end of the FCA’s investigation will come as a relief to the billionaire and Wise shareholders, as it removes any lingering doubts about Mr Käärmann’s ability to continue as chief executive.
Wise has always insisted Mr Käärmann’s actions were the result of his failure to keep his “personal admin in order”, with an investigation finding he had not opened letters from HMRC at the time they were sent.
In a statement, Wise stressed that “no adverse findings” had been made by the FCA about whether he was “fit and proper” or had “acted with a lack of integrity”.
The company, which had earlier reported the breach to the FCA, added that it now considered the matter “closed”.
David Wells, chairman of Wise, added: “The board continues to take Wise’s regulatory obligations very seriously.
“Following the inclusion of Kristo’s name on HMRC’s list in September 2021, the board conducted its own investigation and assessed that Kristo remained fit and proper to continue in his roles at Wise.
“The board also required him to take remedial actions to ensure that his personal tax affairs are appropriately managed and is satisfied that these actions were taken.”
Mr Käärmann said: “After several years and full cooperation with the FCA, we have brought this process to a close.
“I remain focused on delivering the mission for Wise and achieving our long-term vision for being ‘the’ network for the world’s money.
“We continue to build a product and a company that will serve our customers and owners for the decades to come.”
The Estonian entrepreneur co-founded Wise in 2011 after being shocked by the large fees levied on money transferred home from a UK bank account.