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The Massachusetts Division of Banks and five other state financial regulators are fining the U.S. arm of money-transfer fintech Wise $4.2 million for problems in its anti-money laundering compliance program.
The problems were serious enough that they could have enabled money laundering, the DOB claimed in an announcement.
Deficiencies were identified in Wise’s processes for investigating and reporting suspicious activity, the DOB said, including the failure to timely file suspicious activity reports and transaction monitoring data integrity issues. The company also allegedly failed to timely correct past deficiencies detected in prior examinations and independent audits according to an examination report issued last August.
In addition to the fine, Wise’s New York-based U.S. arm will have to hire a third-party company to verify its fixes and submit quarterly progress reports to the state financial regulators from Massachusetts, California, Minnesota, Nebraska, New York and Texas for the next two years.
Under the terms of the settlement, Wise did not have to admit wrongdoing.
The Division of Banks noted that the failure to comply with certain state requirements creates the potential that its services could be used to support money laundering, terrorism financing, or other illegal activities. It’s the second time this year that the DOB is using its brand-new powers to regulate money transmission firms.
“Results like this illustrate the power of collaboration and consistency,” DOB Commissioner Mary L. Gallagher said. “This week’s action is an example of state regulators acting quickly to ensure compliance and protect consumers by coordinating a multi-state enforcement action. By combining the states’ collective enforcement power, states can come together to provide consumers nationwide with one common resolution.”
Wise is licensed to transmit money on behalf of customers within the United States and internationally. The company is a subsidiary of Wise PLC, a financial technology firm based in the United Kingdom.
“Wise takes its responsibility to provide a safe and secure service to our customers very seriously,” a spokesperson from Wise said in a statement provided to Banker & Tradesman. “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.”
