Wise under investigation over money laundering control concerns

Belgian prosecutors are investigating the UK-based money transfer firm Wise over potential anti-money laundering failures in its European operations, following a report of around €500m in suspicious transactions [1]. The Brussels prosecutor's office confirmed the investigation is at an advanced stage and focuses on suspected criminal use of Wise accounts and failures in customer identification [1]. The company's shares fell by 17.5% after the news broke [1]. Wise, which is dual-listed in the US and UK, stated it is cooperating with authorities but that no specific findings have been shared [1]. The investigation follows a report by The Bureau of Investigative Journalism alleging the firm's platforms were involved in suspicious transactions across 30 European countries [1]. This is not the first regulatory challenge for the fintech; in 2024, the National Bank of Belgium identified deficiencies in its customer address verification, and last year it was fined $4.2m by six US states for compliance violations [1]. Wise, founded in 2011, facilitates cross-border remittances, a market where money-transfer companies capture a substantial share of the funds sent due to fees [3]. The firm is part of a broader fintech sector, which includes European neobanks like Germany's N26, that operate within the EU's Single Euro Payments Area [4]. The scrutiny highlights the persistent regulatory challenges financial institutions face in preventing illicit flows, a problem not confined to new entrants. Established global banks like HSBC, with $3.212 trillion in assets, have also faced significant anti-money laundering enforcement actions in the past [2]. Wise stated that financial crime prevention is a major focus, with about a third of its global staff dedicated to it [1]. The company's European business is based in Belgium, which serves as its hub for EU operations [1].