Wise, formerly known as TransferWise, a UK payments fintech, has been fined $360,000 by the UAE for a number of AML due diligence failures.
According to the Abu Dhabi authority, the payments app only performed enhanced due diligence on users deemed as high risk.
It was also determined that Wise did not consider customer nationality while assessing potential threats.
Wise Nuqud, a subsidiary of the fintech, was fined by the Financial Services Regulatory Authority (FRSA) of Abu Dhabi Global Market.
Other flaws included failing to seek top management approval before establishing business partnerships with high-risk customers.
In a statement, Emmanuel Givanakis, the regulator’s chief executive said: “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,”
Wise and its senior management had cooperated with its investigations, and the penalty was decreased by 20% because the fintech promised to settle as soon as possible.
According to the FRSA, no cases of money laundering have been found as a result of the errors.
The UAE regulator does not usually name those who face fines, but the amount of the fine is expected to be published later today (Tuesday).
The Financial Conduct Authority (FCA) is already investigating Kristo Käärmann, the company's chief executive and co-founder, after he was fined by HM Revenues & Customs (HMRC) for willfully failing to make tax payments.
Following the HMRC penalty, Wise conducted an inquiry with its legal counsel by the end of 2021 before reporting its findings to the regulator.
In a statement the company responded to the fine: “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.”
The Financial Times stated today that the matter would put pressure on the fintech sector at a time when interest rates and costs are rising.
When it went public in July 2021, the firm was valued at about £9 billion.
Despite being profitable since 2017, its share price has dropped over 50% since listing. It, like other fintechs, has experienced a savage market sell-off as investors fled growth stocks in the face of rising interest rates.
Customers brought ahead money transfers amid worries of higher volatility later in the year, according to the company's latest quarterly statistics, which were revealed last month.
By fLEXI tEAM