The CEO of fintech giant Wise is being investigated by UK regulators after it was found he failed to pay tax obligations worth roughly £720,000.

The investigation comes after HM Revenue & Customs (HMRC), which is responsible for the UK collection of taxes, included Kristo Käärmann on its public list of deliberate tax defaulters last September.

Käärmann was fined roughly £365,000 by the tax authority for failing to pay his obligations for the 2017 to 2018 tax year, according to HMRC.

The UK’s Financial Conduct Authority (FCA) is now investigating the matter “regarding the regulatory obligations and standards to which Kristo is subject,” Wise said in a statement. The investigation is due to Käärmann’s status as an “approved person” who must be deemed “fit and proper” for the role, the Financial Times reports.

It has been reported that Wise reported the tax breach to the FCA, after the company’s board hired external lawyers to investigate Käärmann’s tax violation.

The investigation is a serious blow for Wise, which had a record-breaking start to its listing on the London Stock Exchange last year after being valued at £8.75bn. The company’s share price dropped by 2.8pc, the Guardian reports.

Wise opted for a direct listing rather than an initial public offering, which meant the company didn’t issue any new shares, but gave investors the opportunity to sell their shares at a price determined by the market.

The company’s successful debut hinted at a turnaround for the fortunes of tech companies on the London Stock Exchange, after Deliveroo’s underwhelming entrance earlier that year.

The company’s stock has fallen by around 60pc since then, which reflects the broader struggles fintech firms are facing amid rising inflation and economic pressures, the Financial Times reports.

Formerly known as TransferWise before rebranding to Wise last year, the London-based company was founded in 2011 by Käärmann and Taavet Hinrikus.

Hinrikus was the CEO of the company until 2017 and remains its chair. Today, Hinrikus and other entrepreneurs founded Plural, a new investment platform for early-stage tech start-ups, with a starting fund of €250m.

The company was established as a means to quickly transfer money across borders with lower fees, eventually becoming one of fintech’s most successful companies.

Since its founding, the company has broadened into other areas of finance. In 2020, Wise obtained a licence from the UK’s Financial Conduct Authority that would allow it to offer investment management services.

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