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Wise’s application for a US banking licence has been rejected by regulators because of “longstanding deficiencies” in the fintech’s anti-money laundering checks, as well as a lack of understanding of the banking law.
The Office of the Comptroller of the Currency said in a letter that Wise’s US business had not demonstrated a comprehensive understanding of the money laundering rules or US banking law and responsibilities generally.
“Wise US has no historical experience with fiduciary activities, and proposed management and directors failed to demonstrate sufficient experience with the fiduciary activities of national banks,” the regulator said in a letter to Wise.
“The OCC cannot conclude the proposed national trust bank will have an effective [Anti-Money Laundering/Countering the Financing of Terrorism] compliance programme for conducting business in the US until Wise has addressed existing deficiencies,” it said.
Wise’s shares were down 9 per cent in morning trading on Friday.
Wise said: “Since submitting this original application over a year ago, our business and compliance maturity have evolved significantly. This includes changes we have made in response to OCC feedback throughout the application process, and the OCC’s letter published today refers to these historical issues with our original application that we have been addressing.”
Wise also said that its application, first made last year, was also now out of date because of US President Donald Trump’s Genius Act, which regulates cryptocurrency companies. Wise now intends to submit a fresh application under the Genius Act framework which will help it achieve a similar goal of accessing the federal payments network.
“We have informed the OCC that we plan to submit a new application for a national trust bank charter under a Genius Act framework, as we continue to maintain a positive relationship with the agency,” it said.
The rejection is the latest regulatory setback for Wise. Last month the group’s shares fell as much as 20 per cent in one day over investigations by Belgian authorities into potential money laundering offences and possible use of its accounts by international criminal groups.
Last year, the group’s US subsidiary was fined $4.2mn after US regulators found that it flouted the Bank Secrecy Act and AML laws under the Countering the Financing of Terrorism programme.
Under the Trump administration, the OCC has taken a lighter-touch approach to approval for banking licences, helping fintechs with their applications. Both Revolut and Klarna have applied for similar accreditations.
Wise, which has 19mn users globally, was founded in 2011 and specialises in cheap or free international money transfers.
