Wise, formerly TransferWise, has been accused by MS BANK of using the names and financial data of customers to illegally send money abroad.

MS BANK, which was Wise’s former Brazilian banking partner, said that the company had “defrauded international transfers” without its knowledge.

The bank said that Wise had involved customer names in illegalities that can “lead up to six years in prison.”

“MS BANK communicated to the central bank about non-conformities in the values of some operations carried out via TransferWise and after an internal investigation by the Central Bank and the Federal Revenue it was confirmed that TransferWise changed foreign currency quotes to send illegal money abroad with a ride with remittances platform customers,” said the bank in a statement. “MS BANK ended its activities with TransferWise, reported the fraud to the Federal Public Ministry and, guided by the prioritisation of the safety of its operations, ethics and transparency with its customers, is communicating to all customers how to proceed.”

Wise recently received authorisation from Brazil's central bank to operate as a foreign exchange broker.

It said that MS BANK terminated its partnership last month, without prior notice, at "the same time as the launch of [the bank's] own transfer service."

"The public accusations related to tax and FX reporting appear to have been timed to raise awareness of their competing product," said Wise in a statement. "We are not aware of any formal investigation against TransferWise by any regulator or other authority, either in Brazil or anywhere else.

It added: "However, as we take accusations around taxes and fx reporting very seriously, and prior to our break with MS Bank, we're continually reviewing this matter - along with the Central Bank and the tax authority - who we are still in communication with regarding this matter. We are ensuring that our current operation in the country - under our own license - complies with all the regulator's requirements."

It said that none of the allegations have any bearing on customers from a tax perspective, or otherwise.

The company is now taking legal measures to resolve the matter with MS BANK.

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