The multi-state settlement involved regulatory agencies from New York, Massachusetts, Texas, California, Minnesota, and Nebraska.
Alongside the $4.2 million penalty, the watchdogs have ordered Wise to conduct a lookback for previously closed accounts, enhance its reporting procedures for suspicious activity, strengthen its due diligence procedures for AML/CFT risk, and improve its systems for data integrity regarding customer accounts.
Under the order, Wise will engage an independent third party to verify corrective actions to the systems have been performed and, for two years, submit quarterly written progress reports to the multistate regulators.
“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,” says NYDFS superintendent Adrienne Harris. “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.”
A Wise spokesperson says: “Wise takes its responsibility to provide a safe and secure service to our customers very seriously. 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.”
It’s not the first time that Wise has been in hot water with US regulatory bodies. In January, the firm received a $2.025 million penalty from the Consumer Financial Protection Bureau (CFPB) for misleading customers about fees and charges. The penalty was later reduced to $44,955.
The firm has also fallen foul of money laundering rules in other jurisdictions: In 2022 it was hit with a $360,000 fine by Abud Dhabi’s financial regulator for failing to “establish and maintain adequate AML systems and controls to ensure full compliance with its AML obligations”.
Wise has also been ordered to undertake a remediation programme in Europe after investigations by the National Bank of Belgium concluded that the fintech did not have proof of address for hundreds of thousands of customers
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