European regulators have been closely scrutinizing Wise, the London-listed fintech. This article delves into the details of their rebukes and the subsequent remediation plan. It also explores how Wise is coping with the challenges of balancing user experience and risk controls while dealing with the scale of the task.
Wise's Anti-Money Laundering Journey - A Tale of Challenges and Remediation
Regulatory Rebukes and Remediation
European regulators have taken a firm stance against Wise over its anti-money laundering controls. As reported by five people familiar with the matter, the National Bank of Belgium, which supervises Wise in Europe, rebuked the fintech. A review in early 2022 found that Wise lacked proof of address for hundreds of thousands of customers. This led to the devising of a remediation plan approved by the regulator. The plan required Wise to contact all customers within weeks to request their proof of address and freeze the accounts of those who did not provide the documents in time.This highlights the significant challenges faced by fast-growing fintechs. Wise, formerly known as TransferWise, allows customers to send fast payments across borders at a cheap rate. Many use it to send large sums for property purchases. Wise takes its responsibility to protect customers and prevent money laundering seriously. In 2021, the National Bank of Belgium carried out a routine review post-Brexit and Wise worked closely with the regulator to implement their recommendations.Coping with the Task
To handle the scale of the task, Wise moved some of its customer service staff to its anti-financial crime function. This led to a significant jump in queries from customers. Around a third of Wise's global team is dedicated to fighting financial crime and ensuring compliance with over 65 regulatory licences worldwide.During Russia's invasion of Ukraine, Wise implemented the remediation plan. One person familiar with the process said the company was presented with the probe findings before the war. Later that year, Wise received a $360,000 fine from the United Arab Emirates' financial regulator for failures in its anti-money laundering controls.In 2023, the UK's Office of Financial Sanctions Implementation disclosed that Wise had allowed an account of a company owned by an individual on the Russia sanctions list to transfer £250. The group also paused the onboarding of its UK and European business customers last year due to the increased due diligence requirements following Russia's invasion.Wise listed in London in 2021 at a £9bn valuation, highlighting the confidence in the UK market. Despite the challenges, Wise continues to strive for compliance and improve its anti-money laundering processes.READ MORE