Wise has been refused a US banking licence, the payments company said, months after switching its primary stock market listing from London to New York in May.
The US Office of the Comptroller of the Currency (OCC) rejected the application because of historical issues with the original filing, including in relation to the prevention of financial crime, Wise said.
The London-headquartered company said it had applied for a national trust bank charter more than a year ago, submitting it in June last year. The charter is one of the licences issued by the OCC, the US regulator that supervises national banks and federal savings associations.
Wise already operates in the US. The licence would have given it direct access to payment systems through the Federal Reserve and allowed it to offer some financial services to customers, including fiduciary, custodial and safekeeping services to US consumers.
The company said the OCC’s decision does not affect its normal operations in the US, which run under existing money transfer licences.
Run by its billionaire co-founder, Kristo Käärmann, Wise said regulations for payments in America had changed significantly since it submitted the application, partly because of new laws under President Trump that regulate cryptocurrencies.
“We have invested significantly in enhancing our processes and controls globally and in the US since the original application for the trust charter was prepared, including those to prevent financial crime alongside other forms of risk,” the company said.
Wise said it had been strengthening its processes in the US with improvements to its investigation and reporting processes, and by collecting better data from its customers. It said it had also increased the resources dedicated to its local compliance efforts, including investments to prevent financial crime.
“Preventing bad actors from using financial institutions like Wise is of the utmost importance to us,” it said.
The company plans to submit a new application under the new regulatory framework.
“We look forward to submitting a viable application to the OCC in due course which reflects both our growing business and the changing regulatory landscape,” it said.
Wise switched its primary listing from the London Stock Exchange to the Nasdaq exchange in May to take advantage of a larger stock market and bring in new investors. Shareholders approved the move in July last year, alongside a 10-year extension of Käärmann’s enhanced voting rights that was opposed by co-founder Taavet Hinrikus.
Käärmann and Hinrikus, entrepreneurs from Estonia, founded Wise in 2011 under its original name TransferWise as a provider of cross-border money transfers, before expanding the business into investment products and launching a debit card. The group now has about 19 million customers globally and employs more than 8,000 people.
The OCC’s decision comes after it emerged that authorities in Brussels were investigating the firm over concerns that its accounts might have been used for money laundering.
The Bureau of Investigative Journalism revealed that the public prosecutor’s office had opened an investigation into transactions worth €500 million, and that the allegations were related to underlying potential offences including fraud, corruption and drug trafficking.
Wise shares lost 112p, or 12 per cent, to 822p on the day the news broke. Belgium is the base for Wise’s European operations, and the company uses the European Union’s passporting system for financial services to conduct business across the bloc.
Wise said at the time that it was “working with the Brussels prosecutor” to respond to queries and that it would continue to engage with the Brussels prosecutor’s office “if and when any specific findings are made available to us.”
Other UK fintechs have secured banking permissions in the same period. Revolut launched its UK bank in March after receiving approval from the Prudential Regulation Authority, enabling it to offer deposits protected by the Financial Services Compensation Scheme.
