Christo Karmann, CEO and co-founder of Wise.
Owen Noonan | Sports file | Getty Images
LONDON – Christo Karmann, the billionaire CEO of the money transfer company wiseHe was fined £350,000 ($454 million) by UK financial regulators for failing to report an issue with his tax returns.
The Financial Conduct Authority (FCA) on Monday ordered Carman, who co-founded Wise in 2011 with fellow businessman Taavet Hinrikus, to pay a hefty fine for breaching the body's senior managers' code of conduct.
The Financial Conduct Authority (FCA) said Carman failed to notify the regulator that he had not paid a capital gains tax liability when he acquired £10m worth of shares in 2017.
The watchdog found it breached the Senior Management Conduct Rule 4, which states: “You must appropriately disclose any information of which the FCA would reasonably expect to be notified.”
It comes after the wisecracking President was hit with a separate fine of £365,651 by Her Majesty's Tax Collector's Agency Her Majesty's Revenue and Customs (HMRC) in 2021 for late filing his tax returns during the 2017/18 tax year.
Carman's name has been added to HMRC's public tax defaulters list. His tax liabilities for that year were £720,495, according to HMRC.
“High standards” are expected
The Financial Conduct Authority (FCA) said on Monday that between February 2021 and September 2021, tax issues were relevant to its assessment of Carman's suitability and suitability as a senior director of a financial services company.
The regulator added that Carman failed to consider the significance of the issues and notify the FCA despite knowing about them for more than seven months.
“We and the public expect high standards from leaders of financial companies, including candor and openness,” Therese Chambers, joint executive director of enforcement and oversight, said in a statement on Monday.
“It should have been clear to Mr Carman that he needed to tell us about these issues which were highly relevant to our assessment of his fitness and fitness.”
Carman said in a statement Monday that he remains “focused on fulfilling WISE's mission and realizing our long-term vision.” He said: “After several years and full cooperation with the Financial Supervision Authority, we have completed this process.”
“We continue to build a product and company that will serve our customers and owners for decades to come,” Carman added.
David Wells, president of WISE, said the company's board of directors “continues to take WISE's regulatory obligations seriously.”
Wise's board found that Carman was “fit and proper” to continue his position at the company following an internal investigation in 2021.
As a result of this review, the Board required Carman to take “corrective actions” to ensure his personal tax affairs are managed appropriately.
Less dangerous than feared
The value of the fine imposed by the Financial Supervision Authority is significantly less than the maximum possible fine he could have faced.
Carman could have been fined up to £500,000 for his tax failings, but he qualified for a 30% rebate because he agreed to resolve the issues.
News of the fine comes after Wise earlier this month announced a 17% increase in “core income,” which consists of cross-border revenue, card and other revenue, and interest income.
Wise reiterated its target of achieving an underlying profit before tax margin of 13% to 16% over the medium term thanks to investments in pricing, and added that this meant it would not have to make “more material investments in discount pricing” in the second period. Half the year.
In a note on Monday, analysts at British investment bank Peel Hunt boosted their forecast for Wise's full-year pre-tax earnings by 15%. They have a target price of £1,000 and a 'buy' rating for the stock.
“While WISE has not made any changes to its June 2024 guidance, we expect a big win in the near term,” analysts Gautam Pillai and Barun Singh wrote in the note.
Karman and Henrikus, both Estonian tech entrepreneurs who emigrated to the UK, have taken Wise from a scrappy startup to a payments disruptor now worth £7.4bn.
They created Wise to offer a low-cost alternative to banks that charge hidden fees for moving money across borders.
