UK-based financial technology company Wise has been criticised by European regulators for alleged shortcomings in anti-money laundering (AML) controls, leading to a formal remediation plan to address these issues.
According to reporting by the Financial Times which broke the story, a review of the startup’s operations by the National Bank of Belgium (NBB) uncovered significant shortcomings. The NBB, which oversees the London-listed fintech’s European operations, found that the company lacked adequate proof of address for hundreds of thousands of customers in early 2022.
Wise, in response to the findings, has developed a remediation plan to reach out to affected customers within weeks to obtain the necessary documentation. Sources state that customers who fail to comply may have their accounts frozen until the required proof of address is provided. This process has reportedly been approved by the Belgian regulator.
Established in 2011 and listed publicly in 2021 at a £9bn valuation, Wise’s platform aims to simplify and reduce the cost of international money transfers. Formerly known as TransferWise, the company enables users to send low-cost international payments, with many customers relying on the platform for large transactions, such as property purchases across borders.
Wise has acknowledged its responsibility to protect customers and prevent money laundering, emphasising that it took the findings seriously. “In 2021, the National Bank of Belgium carried out a routine review of Wise Europe as part of a marketwide exercise in the wake of Brexit,” the company reportedly stated. “We worked closely with our regulator in Belgium and have fully implemented their recommendations.”
Global regulatory challenges for Wise
The fintech company has also reallocated some of its customer service staff to its anti-money laundering team in response to a surge in user queries during the remediation process. Wise further revealed that around one-third of its global workforce is now dedicated to combating financial crime. The team works to ensure compliance with the requirements of over 65 regulatory licences worldwide.
The company’s struggles with its AML controls have not been limited to Europe. In 2022, Wise was fined $360,000 by the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) for failing to meet anti-money laundering standards, particularly in relation to due diligence for high-risk customers. Furthermore, in 2023, the UK’s Office of Financial Sanctions Implementation revealed that Wise allowed transactions involving a company linked to a Russian individual on the UK sanctions list, facilitating a transfer of £250.
The company also faced regulatory challenges in the UK and Europe last year, temporarily pausing the onboarding of new business customers. This was due to the additional due diligence required in light of the sanctions imposed after Russia’s invasion of Ukraine.
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