Wise Implements Remediation Plan to Overcome AML Compliance Gap in Europe

On November 29, 2024, British money transfer firm “Wise” was placed under a formal remediation plan by European regulators due to concerns over its AML controls, citing 5 people familiar with the issue.

In 2022, Wise’s European supervisor, the National Bank of Belgium initiated the review & explored a loophole that the company lacked proof of address for hundreds of thousands of its customers.

Wise is now remediating a plan approved by the European regulator to correct the AML deficiencies. The company will also contact all relevant customers within weeks to request proof of address.

Further, the regulatory-approved remediation plan specifies that customer accounts may be frozen if the required proof of address isn’t provided within the specified timeframe.

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Wise, a UK-based fintech company was founded in 2011 & listed in 2021 on the London Stock Exchange to provide cheaper and fairer international money transfer services.

In February 2021, Wise rebranded itself, as it was formerly known as TransferWise, to expand its range of financial services beyond traditional money transfers.

Wise carried out the remediation plan in the weeks following Russia’s invasion of Ukraine, which led the European Union to impose sanctions on numerous persons associated with the government of Russian President Vladimir Putin.

The corporation was given the probe’s results prior to the battle, according to a person who was familiar with the process.

Later on, in August 2022, the Abu Dhabi Global Market’s Financial Services Regulatory Authority (FSRA) imposed a $360,000 fine on the company for non-compliance with AML regulations.

The FSRA stated that Wise had failed to establish and maintain required AML systems and controls.

“We found that Wise did not establish and maintain adequate AML systems and controls to ensure full compliance with its AML obligations.”

FSRA

In 2023, The UK’s Office of Financial Sanctions Implementation revealed in 2023 that Wise had permitted the transfer of £250 to the account of a business held by a person on the UK’s Russia sanctions list.

According to media sources, in 2021, Wise listed in London at a £9bn valuation, a move 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.