Payments app Wise has been fined $360,000 by United Arab Emirates’ financial regulator over failures in its anti-money laundering controls, piling pressure on the fintech just as rising rates and costs threaten the sector.
The Financial Services Regulatory Authority of Abu Dhabi Global Market, an international financial centre, imposed the fine on Wise Nuqud, a wholly-owned subsidiary of the remittance fintech, over a series of failures in its AML systems.
The failures included only carrying out enhanced due diligence on customers identified as high risk after they had established a business relationship with the company, and a failure to consider customer nationality as part of its assessment of their potential risks.
“The FSRA is committed to ensuring that all regulated entities maintain high standards to address money laundering risks and, where appropriate, the FSRA will take strong action to ensure firms comply fully with the anti-money laundering requirements in ADGM,” said Emmanuel Givanakis, the regulator’s chief executive, in a statement seen by the Financial Times.
The regulator is expected to announce the fine as soon as Tuesday.
Other issues identified include a failure to properly obtain approval from senior managers to establish business relationships with high-risk customers. The regulator said Wise also did not identify the expected volume of business from these clients.
The watchdog said it did not identify any instances of money laundering resulting from the failures, and said Wise and its senior management had co-operated with its inquiries. The fine was reduced by 20 per cent as Wise did not dispute the findings and agreed to settle at the earliest opportunity.
“Wise takes its responsibility to protect its customers and prevent money laundering very seriously. We have worked closely with the Abu Dhabi Global Market’s Financial Services Regulatory Authority to resolve their concerns, and no instances of money laundering or other financial crime were identified by Wise or by the FSRA,” said the fintech in a statement.
Wise, formerly known as TransferWise, was valued at almost £9bn when it went public in July 2021. In its latest quarterly results released last month, the company reported a 50 per cent increase in revenues year on year, as customers brought forward money transfers amid fears of greater volatility later in the year.
But the company, whose listing in London was seen as a rare coup for the UK market, has struggled over the past year.
The Financial Conduct Authority is investigating chief executive and co-founder Kristo Käärmann after he was fined by HM Revenues & Customs for deliberately defaulting on tax payments.
After the HMRC penalty, Wise completed an investigation with its legal advisers at the end of 2021, before passing its findings to the regulator.
Its share price has fallen almost 50 per cent since its listing, despite being profitable since 2017. Similar to other fintechs, it has faced a brutal market sell-off, as investors have ditched growth stocks in the face of rising interest rates.
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