Kristo Käärmann, CEO and co-founder of money transfer firm Wise, may face sanctions in the U.K. for a tax violation that could see him banned from the industry.
As the Financial Times reported Friday (Oct. 1), Käärmann could be labeled a “deliberate tax defaulter” after appearing on a recent list of people HM Revenue and Customs — the British taxing authority — penalized for deliberately filing erroneous tax returns or deliberately failing to meet their personal tax obligations.
Käärmann owns 19 percent of Wise, which as the news outlet notes became the “darling” of the London markets after raising 9 billion pounds ($11 billion) in its record direct listing this summer.
Käärmann is considered an “approved person” under the Financial Conduct Authority’s senior management regime, which can censure senior financial executives.
“I would say that is highly likely to be relevant as far as the FCA is concerned,” said one senior regulatory lawyer of the tax issue in the Financial Times story. “If I [held senior management functions], I would want to avoid any infringement of the law, no matter how minor or apparently unrelated to my role.”
Käärmann’s infraction was apparently connected to an outstanding 720,495 pound tax bill for the 2017-18 tax year, leading to a 365,651 pound fine by HMRC.
Attorney Sara George told the Financial Times the sanctions could be worse if Käärmann hadn’t disclosed the matter to the FCA on his own.
“His tax return has since been completed, and he paid substantial late filing penalties. He has since devoted more time to keeping his personal admin in order,” Wise said in a statement, acknowledging that Käärmann was later in submitting his return “despite sufficient reminders from HMRC.”
The FCA declined to comment on the Financial Times report.