European regulators rebuked Wise, the London-listed fintech, over its anti-money laundering controls and forced the payments group into a formal remediation plan, according to five people familiar with the matter, Financial Times reports.
A review by the National Bank of Belgium, which supervises Wise in Europe, found in early 2022 that the fintech lacked proof of address for hundreds of thousands of customers, said three of the people.
As a result, Wise devised a remediation plan, approved by the regulator, that required it to contact all of the customers in a matter of weeks to request their proof of address, the three people said. The plan also required it to freeze the accounts of customers who did not provide the documents in time, they added.
The probe highlights the challenges for fast-growing fintechs looking to scale up their anti-financial crime capabilities while balancing user experience with adequate risk controls.
Wise, formerly known as TransferWise, allows customers to send fast payments across borders at a cheap rate. Many of its customers use its service to send large sums across borders to buy property.
Wise said it took “its responsibility to protect its customers and prevent money laundering very seriously”.
To cope with the scale of the task, Wise moved some of its customer service staff to its anti-financial crime function and experienced a jump in queries from customers, said two people familiar with Wise’s efforts. “Around a third of our global team is dedicated to fighting financial crime and helping to ensure that we are in compliance with the requirements of the more than 65 regulatory licences that we maintain around the world,” Wise said.
Wise implemented the remediation plan in the weeks that followed Russia’s invasion of Ukraine, which led the EU to put sanctions on many individuals connected to Russian President Vladimir Putin’s regime.
The group also paused the onboarding of its UK and European business customers last year, with then-interim chief executive Harsh Sinha telling the FT that Wise had not anticipated the degree of extra due diligence that would be required following the wave of sanctions stemming from Russia’s invasion of Ukraine.
Banking 4.0 – „how was the experience for you”
„So many people are coming here to Bucharest, people that I see and interact on linkedin and now I get the change to meet them in person. It was like being to the Football World Cup but this was the World Cup on linkedin in payments and open banking.”
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