Starling Bank Slammed with £29M Fine for ‘Shockingly Lax’ AML Controls, Exposing UK Financial System to Criminals!

Charlene Lensburg
Wed, 02 Oct 2024 09:55:44 +0000
FCA, High-risk payment processors, Money Laundering

The UK neobank Starling Bank has been fined £29 million by the UK FCA for opening accounts for high-risk customers and failing to screen against full sanctions lists. Its rapid expansion outpaced its compliance measures, leaving significant gaps in its AML framework. Starling grew from approximately 43,000 customers in 2017 to 3.6 million in 2023. However, measures to tackle financial crime did not keep pace with its growth.

Key Points

FCA fines Starling Bank £29 million for severe anti-money laundering (AML) and sanctions failures.

The neobank opened over 54,000 high-risk accounts despite FCA restrictions.

Automated screening systems failed to capture the full sanctions list for years, heightening financial crime risk.

Starling’s rapid growth outpaced its compliance controls, leaving the system exposed.

Short Narrative

The FCA has imposed a £29 million fine on Starling Bank for egregious lapses in its AML and financial sanctions screening. In 2021, following an FCA review of financial crime controls at challenger banks, significant concerns were identified regarding Starling Bank’s anti-money laundering (AML) and sanctions framework. As a result, the bank agreed to a regulatory requirement to cease opening new accounts for high-risk customers until its controls were improved. However, Starling did not comply with this requirement, and between September 2021 and November 2023, the bank proceeded to open over 54,000 accounts for 49,000 high-risk customers in violation of the FCA’s directive.

This oversight has led to multiple breaches and exposed the financial system to criminal activity. Starling’s failure to adapt its compliance framework to match its rapid growth has sparked strong criticism from the FCA, with enforcement director Therese Chambers labeling the controls as “shockingly lax.”

Actionable Insight

The case highlights the risks of rapid growth without appropriate investment in compliance infrastructure. Banks, especially challenger banks, must prioritize AML and sanctions controls to avoid regulatory backlash and protect the integrity of the financial system.

Call for Information

Any whistleblowers or insiders with knowledge of further compliance breaches at Starling Bank or other financial institutions, fintechs, or paytechs are urged to come forward to assist in regulatory oversight.