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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.
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”.
“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. We worked closely with our regulator in Belgium and have fully implemented their recommendations.”
The Belgian bank declined to comment.
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. One person familiar with the process said that the company had been presented with the findings of the probe before the start of the war.
Later that year, Wise received a $360,000 fine from the United Arab Emirates’ financial regulator over failures in its anti-money laundering controls including its due diligence for high-risk customers.
In 2023, the UK’s Office of Financial Sanctions Implementation disclosed that Wise had allowed the account of a company owned by an individual on the country’s Russia sanctions list to transfer £250.
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.
Wise listed in London in 2021 at a £9bn valuation, a move that was hailed as a vote of confidence in the UK market, which has long struggled to compete with New York as a destination for fast-growing tech companies.
