Wise was denied a US banking license, the payments company said, months after it switched its stock market listing from London to New York in May.
The US Office of the Comptroller of the Currency (OCC) rejected the request because of historical problems with the original file, including related to the prohibition of financial crimes, Wise said.
The London-headquartered company said it had applied for a National Trust Bank charter more than a year ago, and submitted it in June last year. The charter is one of the licenses issued by the OCC, the US regulator that oversees national banks and public savings associations.
Wise is already working in the US. The license would have given it direct access to payment systems through the Federal Reserve and allowed it to provide certain financial services to customers, including fiduciary, custodial and safekeeping services for US consumers.
The company said the OCC decision does not affect its regular operations in the US, which operate under existing money transfer licenses.
Owned by billionaire co-founder, Krist Käärmann, Wise said that payment regulations in the United States have changed significantly since submitting the application, in part due to new regulations under President Trump that regulate cryptocurrencies.
“We have invested heavily in improving our processes and controls globally and in the US since the initial trust charter application was prepared, including to prevent financial crime and other types of risk,” the company said.
Wise said it was strengthening its processes in the US by improving its investigation and reporting processes, and by collecting better data from its customers. It said it has also increased resources dedicated to its local compliance efforts, including investments to prevent financial crime.
“Preventing bad actors from using financial institutions like Wise is very important to us,” he said.
The company plans to submit a new application under the new regulatory framework.
“We look forward to submitting an effective application to the OCC over time that reflects our growing business and the changing regulatory landscape,” he said.
Wise switched its primary listing from the London Stock Exchange to the Nasdaq exchange in May to take advantage of the larger stock market and bring in new investors. Shareholders approved the move in July last year, along with a 10-year extension of Käärmann’s enhanced voting rights opposed by co-founder Taavet Hinrikus.
Käärmann and Hinrikus, Estonian entrepreneurs, founded Wise in 2011 under its original name TransferWise as a cross-border money transfer provider, before expanding the business into investment products and opening a debit card. The group now has approximately 19 million customers worldwide and employs over 8,000 people.
The OCC’s decision comes after it emerged that Brussels authorities are investigating the firm over concerns that its accounts may have been used for money laundering.
The Bureau of Investigative Journalism revealed that the public prosecutor’s office has opened an investigation into a transaction worth Euro 500 million, and that these allegations are related to hidden crimes including fraud, corruption and drug trafficking.
Smart 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 financial services passporting system to do business across the bloc.
Wise said at the time that it was “working with the Brussels prosecutor” to answer questions and that he would continue to communicate with the Brussels prosecutor’s office “if and when we have any findings.”
Other UK fintechs have received banking approvals at the same time. 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.
