The Financial Conduct Authority (FCA) has imposed a fine of
£28,959,426 on Starling Bank Limited. The fine is for failings related to
financial crime, specifically concerning the bank’s financial sanctions
screening process.
The FCA also found that Starling repeatedly breached a
requirement prohibiting it from opening accounts for high-risk customers.
Starling’s High-Risk Account Openings
Starling Bank experienced rapid growth in its customer base,
increasing from around 43,000 customers in 2017 to 3.6 million in 2023.
However, the measures the bank implemented to fight financial crime did not
keep pace with this expansion.
In 2021, the FCA reviewed the financial crime controls of
various challenger banks and identified significant concerns regarding
Starling’s anti-money laundering and sanctions framework.
As a result of these findings, the FCA mandated that
Starling restrict the opening of new accounts for high-risk customers until
improvements were made. Despite this requirement, Starling opened over 54,000
accounts for 49,000 high-risk customers between September 2021 and November
2023.
FCA Investigation Takes 14 Months
In January 2023, Starling discovered that its automated
screening system had only screened customers against a small portion of the
complete list of individuals subject to financial sanctions since 2017.
An
internal review revealed systemic issues within its financial sanctions
framework. Following this review, Starling reported multiple potential breaches
of financial sanctions to the appropriate authorities.
“Starling’s financial sanction screening controls were
shockingly lax. It left the financial system wide open to criminals and those
subject to sanctions,” commented Therese Chambers, Joint Executive Director of Enforcement
and Market Oversight.
“It compounded this by failing to properly comply with FCA
requirements it had agreed to, which were put in place to lower the risk of
Starling facilitating financial crime.”
The investigation into Starling’s practices took 14 months,
significantly shorter than the average of 42 months for cases concluded in
2023/24. This timeline reflects the FCA’s efforts to expedite its enforcement
investigations.
In response to these findings, Starling Bank has implemented
programs to address the breaches and improve its overall financial crime
control framework. The FCA will continue to monitor financial institutions to
ensure they have the appropriate systems and controls in place to manage
financial crime risks.
The Financial Conduct Authority (FCA) has imposed a fine of
£28,959,426 on Starling Bank Limited. The fine is for failings related to
financial crime, specifically concerning the bank’s financial sanctions
screening process.
The FCA also found that Starling repeatedly breached a
requirement prohibiting it from opening accounts for high-risk customers.
Starling’s High-Risk Account Openings
Starling Bank experienced rapid growth in its customer base,
increasing from around 43,000 customers in 2017 to 3.6 million in 2023.
However, the measures the bank implemented to fight financial crime did not
keep pace with this expansion.
In 2021, the FCA reviewed the financial crime controls of
various challenger banks and identified significant concerns regarding
Starling’s anti-money laundering and sanctions framework.
As a result of these findings, the FCA mandated that
Starling restrict the opening of new accounts for high-risk customers until
improvements were made. Despite this requirement, Starling opened over 54,000
accounts for 49,000 high-risk customers between September 2021 and November
2023.
FCA Investigation Takes 14 Months
In January 2023, Starling discovered that its automated
screening system had only screened customers against a small portion of the
complete list of individuals subject to financial sanctions since 2017.
An
internal review revealed systemic issues within its financial sanctions
framework. Following this review, Starling reported multiple potential breaches
of financial sanctions to the appropriate authorities.
“Starling’s financial sanction screening controls were
shockingly lax. It left the financial system wide open to criminals and those
subject to sanctions,” commented Therese Chambers, Joint Executive Director of Enforcement
and Market Oversight.
“It compounded this by failing to properly comply with FCA
requirements it had agreed to, which were put in place to lower the risk of
Starling facilitating financial crime.”
The investigation into Starling’s practices took 14 months,
significantly shorter than the average of 42 months for cases concluded in
2023/24. This timeline reflects the FCA’s efforts to expedite its enforcement
investigations.
In response to these findings, Starling Bank has implemented
programs to address the breaches and improve its overall financial crime
control framework. The FCA will continue to monitor financial institutions to
ensure they have the appropriate systems and controls in place to manage
financial crime risks.
This post is originally published on FINANCEMAGNATES.
