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The $4.2m fine for money laundering and Bank Secrecy Act (BSA) violations reflects both a trend towards local enforcement and a sharpened focus on anti-money laundering and counter-terrorism financing (AML/CTF).
Last week, California’s Department of Financial Protection and Innovation (DFPI) and five other state financial regulatory agencies took action against Wise US for breaching the BSA and AML/CTF laws, specifically under the Countering the Financing of Terrorism Program.
Financial services firms operating in the US are required to perform due diligence on customers, including verifying identities, reporting suspicious activity, and applying appropriate controls for high-risk accounts to comply with AML regulations.
Regulators conducted a multistate investigation into Wise in January and February 2024, covering the period July 1, 2022 to September 30, 2023.
They found that the firm was not complying with certain requirements, potentially enabling its services to be exploited for money laundering and terrorism financing.
Strengthened consumer protection
The multistate settlement included a fine of $700,000 to California.
As part of the settlement, Wise agreed to correct deficiencies in its AML/CFT programme, hire an independent third party to verify its corrective action and submit quarterly reports for two years to the states to ensure deficiencies are being addressed.
Wise US, a New York-based subsidiary of UK fintech Wise PLC, is licensed to transmit money on behalf of customers within the US and internationally.
The DFPI, along with state regulators in Minnesota, Nebraska, New York, Texas, and Massachusetts, led the multistate enforcement action.
DFPI Commissioner KC Mohsen said the action highlighted the ongoing collaboration between the DFPI and other state regulators to strengthen consumer protection and uphold trust in the financial services industry nationwide.
“It marks the second significant action this year involving anti-money laundering compliance by money transmitters,” he said.
In January 2025, the DFPI completed a multistate settlement with Block, Inc for BSA and AML breaches.
Reputational blow
The enforcement action came as a reputational blow for Wise in the US, a company which recently announced that it was moving its prime stock market listing from London to the US.
It has sought to limit the impact on its reputation in the US by cooperating with the enforcement action and settling with the regulators speedily.
The multistate enforcement action contrasts with the increasingly hands-off approach of federal regulators such as the Consumer Financial Protection Bureau (CFPB) under the Trump administration.
With the administration cutting the CFPB’s funding, reducing its ability to conduct enforcement actions, state regulators are stepping into the vacated space.
For regulated firms, this raises the prospect of a patchwork of state-level rules, increasing the complexity of ensuring they are compliant and perhaps forcing them to choose where to operate.
The settlements with Block and Wise also highlight the importance of AML/CTF enforcement for regulators in the US and beyond.
AML/CTF has always been a central concern for governments and regulators but this has heightened in recent years against an unpredictable geopolitical backdrop and the opportunities for illicit activity provided by digital assets.
Alongside the US, the EU is also stepping up its AML regulation with the launch of the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA).
In addition, the Monetary Authority of Singapore (MAS) recently announced regulatory actions against nine financial institutions and a number of individuals for AML breaches.
The enforcement action against Wise pulls together these different strands of the regulatory tapestry in the US, and highlights both current preoccupations and the likely direction of travel.
As noted, the firm has agreed to remedial action, and although the fine is large, it could have been worse – Block’s settlement amounted to $80m. Other organisations should take note, in case they are running the risk of similar or more onerous enforcements.
