Wise faces regulatory scrutiny over anti-money laundering practices

A 2022 review conducted by the National Bank of Belgium (NBB), Wise’s supervisory authority in Europe, identified gaps in the company’s compliance practices, including missing proof-of-address documentation for hundreds of thousands of customers, according to sources cited by the Financial Times. 

Following the findings, Wise submitted a remediation plan that was approved by the NBB. The plan required the company to contact affected customers within weeks to obtain the missing documents. Customers who failed to comply faced account freezes, according to the same source. 

The review underscores the challenges faced by rapidly growing fintech companies as they attempt to expand while maintaining robust compliance frameworks. Wise, known for its cross-border payment services, facilitates fast and affordable international money transfers, with a significant portion of transactions involving large sums for property purchases. 

Wise stated that it takes its AML responsibilities seriously, commenting that the National Bank of Belgium carried out a routine review of Wise Europe as part of a market wide exercise following Brexit. To handle the remediation process, Wise redirected some customer service staff to its anti-financial crime division, resulting in a surge of customer inquiries, two sources said. The company noted that approximately one-third of its global workforce is dedicated to combating financial crime and ensuring compliance with over 65 regulatory licences worldwide.

Global regulatory challenges 

The implementation of the remediation plan coincided with increased EU sanctions on individuals linked to Russia following its invasion of Ukraine in early 2022. While the sanctions created additional compliance challenges, sources confirmed that Wise had been informed of the NBB’s findings before the conflict began. 

In 2022, Wise was fined USD 360,000 by the United Arab Emirates’ financial regulator for AML failings, including inadequate due diligence for high-risk customers. 

In the context of these challenges, Wise temporarily halted onboarding new UK and European business customers last year. Company officials acknowledged that the company had underestimated the level of due diligence required in response to the wave of sanctions.