The Financial Conduct Authority has imposed a £350,000 fine on a chief executive for failing to notify the regulator of significant tax issues.
Kristo Käärmann was CEO of Wise plc and director of two FCA regulated firms which form part of the Wise group between February 2021 and September 2021.
The regulator said Käärmann failed to disclose a tax liability with the HM Revenue & Customs, despite being aware of them for over seven months.
His action was in breach of the FCA Senior Management Conduct Rule 4 which states that senior executives “must disclose appropriately any information of which the FCA would reasonably expect notice”.
In February 2021, Mr Käärmann paid a significant fine to HMRC of £365,651 over his capital gains tax liability after he sold shares worth £10m in 2017 without informing the authorities.
In September 2021, HMRC subsequently added Mr Käärmann to its public tax defaulters list.
Between February 2021 and September 2021, these matters, including the circumstances surrounding them, were relevant to the FCA’s assessment of Mr Käärmann’s fitness and propriety, the FCA said.
It added that senior managers and certification regime aims to reduce harm to consumers and strengthen market integrity by creating a system that enables firms and regulators to hold people to account.
FCA said it expected Mr Käärmann to have self-notified of “any matters that may be significant to his fitness and propriety, which included matters that may have an adverse impact on his reputation and/or that of his firms”.
It noted that Mr Käärmann would have been fined £500,000, but he agreed to resolve these matters and so qualified for a 30% discount.
Therese Chambers, joint executive director of enforcement and oversight 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.”
