Wise fined by Abu Dhabi for AML failures

Payments app Wise has been fined $360,000 by United Arab Emirates financial regulators for failing anti-money laundering controls, putting pressure on fintechs at a time when rising interest rates and costs threaten the industry.

International Financial Centre Abu Dhabi Global Markets Financial Services Regulatory Authority fines wholly-owned subsidiary Wise Nuqud remittance fintech, A series of glitches in its anti-money laundering system.

These failures include conducting enhanced due diligence on customers identified as high risk only after establishing a business relationship with the company, and failing to include customer nationality as part of their potential risk assessment.

“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 robust action to ensure that companies fully comply with the anti-money laundering requirements in the ADGM,” said Emmanuel Givanakis, UK Financial In a statement seen by The Times, the regulator’s chief executive.

The regulator is expected to announce the fine as soon as Tuesday.

Other issues identified included failure to properly obtain approval from senior management to enter into business relationships with high-risk clients. The regulator said Wise also did not determine the expected volume of business for those customers.

The regulator said it had not identified any money laundering incidents as a result of the failure, and said Wise and its senior management had cooperated with its investigation. The fine was reduced by 20% as Wise did not dispute the findings and agreed to an early settlement.

“Wise takes its responsibility to protect customers and prevent money laundering very seriously. We are working closely with the Financial Services Regulatory Authority of Abu Dhabi Global Markets to address their concerns and no incidents of money laundering or other financial crime have been identified by Wise or the FSRA,” the fintech said. The company said in a statement.

Wise, formerly TransferWise, was valued at nearly £9 billion when it went public in July 2021. In its latest quarterly results released last month, the company reported a 50% year-over-year increase in revenue as customers sent money early amid fears of greater volatility later in the year.

But the company’s London listing, seen as a rare coup in the UK market, has struggled over the past year.

The Financial Conduct Authority is investigation CEO and co-founder Kristo Kääärmann has been fined by HMRC for knowingly defaulting on taxes.

Following the HMRC penalty, Wise completed an investigation with its legal counsel in late 2021 before passing the findings to the regulator.

Although it has been profitable since 2017, its shares have fallen nearly 50% since going public.Similar to other fintech companies, it also faces brutal market sell-offas investors have abandoned growth stocks in the face of rising interest rates.