Wise fined $4.2 million for multistate compliance lapses | PaymentsSource

U.K. payment company Wise was tagged with a $4.2 million consent order for anti-money-laundering deficiencies following a multistate examination that brought together six state money transmission regulators. 

Regulators from California, Massachusetts, Minnesota, Nebraska, New York and Texas levied the fine after a routine examination conducted found that Wise between July 2022 and September 2023 had deficiencies in compliance controls required by the Bank Secrecy Act and anti-money-laundering laws under the Countering the Financing of Terrorism Program. Colorado, Washington and Wyoming were also part of the multistate examination, but were not part of the enforcement action. 

Anti-money-laundering regulations require financial institutions to verify identities of customers, report suspicious activity and apply additional controls to high-risk accounts. Regulators found that Wise was not in compliance with certain requirements, according to the consent order. 

“Wise takes its responsibility to provide a safe and secure service to our customers very seriously,” a Wise spokesperson told American Banker in an email. “Between July 2022 and September 2023, the Multi-State MSB Examination Taskforce (MMET) conducted a routine examination of Wise US, Inc. Wise fully cooperated with regulators to implement their recommendations. As we build the best way to move and manage the world’s money, we continue to invest heavily in our compliance and controls framework to help ensure we deliver a safe, reliable and seamless customer experience.” 

Wise will pay the $4.2 million penalty, and agreed to correct deficiencies in its AML/CFT program, hire an independent third party to verify corrective actions have been taken, and submit quarterly reports for two years to the states, according to a California Department of Financial Protection and Innovation release. 

“This action highlights the ongoing collaboration between the DFPI and other state regulators to strengthen consumer protection and uphold trust in the financial services industry nationwide,” said DFPI Commissioner KC Mohseni in a statement. “It marks the second significant action this year involving anti-money-laundering compliance by money transmitters.” 

State regulators often cooperate when investigating compliance controls at companies that operate across multiple jurisdictions.

“Through collaboration with our valued state partners we will continue to ensure that money transmitters adhere to rigorous standards to protect consumers and the integrity of the financial system,” said New York Department of Financial Services Superintendent Adrienne Harris in a statement. “Strong relationships with state and federal regulators alike is crucial to ensuring a fair, transparent, and resilient financial system that protects consumers and fosters innovation across the country.” 

Wise has been looking to bolster its U.S. presence, including a potential public U.S. listing. Wise is also seeking a national trust bank charter in the U.S., joining other fintechs such as Circle and Ripple.

But Wise has come under hot water with federal regulators. Wise in January agreed to pay the Consumer Financial Protection Bureau $4.2 million — including a $2.025 million fine and $450,000 reimbursement to customers — for advertising inaccurate fees and failing to properly disclose exchange rates. Wise disputed that characterization.

The CFPB under Russell Vought later reduced the civil money penalty to $44,955 in May. Wise had paid the $450,000 in consumer redress. 

Other payment fintechs have received similar fines. 

Block in January agreed to pay an $80 million fine for BSA/AML failures in its peer-to-peer payments platform Cash App following an enforcement action that saw 48 state financial regulators come together. Block also paid New York State a $40 million fine for its AML lapses in April.