Starling Bank has been hit with a £29m fine by the FCA for violations related to financial crime prevention.
- The bank repeatedly breached prohibitions on opening accounts for high-risk customers, exposing the financial system to potential abuse.
- A significant increase in Starling’s user base from 43,000 in 2017 to nearly four million by 2023 did not coincide with adequate crime prevention measures.
- Between 2021 and 2023, Starling opened 49,000 accounts for high-risk individuals, violating FCA standards.
- Starling Bank has accepted the findings and is implementing extensive measures to strengthen its compliance and risk management frameworks.
Starling Bank has been fined £29m by the UK Financial Conduct Authority (FCA) for significant failings in its financial crime prevention mechanisms. The breaches revolved around the bank’s inability to prevent the opening of accounts for “high-risk” customers, a requirement clearly outlined by the regulator. This lapse has left the financial ecosystem vulnerable to exploitation by criminal elements.
From 2017, Starling experienced an exponential increase in customers, reaching almost four million by 2023. However, this rapid growth was not paired with the necessary updates to their financial crime prevention systems. The FCA’s investigation uncovered that the bank had shockingly lax controls, particularly with its financial sanction screening processes.
During the period from 2021 to 2023, Starling Bank reportedly opened 49,000 accounts for individuals classified as high-risk. This contravened the regulatory guidelines and magnified the exposure of the broader financial community to potential risks.
Therese Chambers, the joint executive director of enforcement and market oversight at the FCA, remarked, “Starling’s financial sanction screening controls were shockingly lax. It left the financial system wide open to criminals and those subject to sanctions.” This statement underlines the severity of the regulatory compliance lapses identified.
The investigation, which concluded in 14 months, demonstrates an improved pace for FCA enforcement actions, especially when compared to the average 42-month duration of such cases. In response, Starling Bank has acknowledged its shortcomings and committed to rectifying these issues by enhancing its governance, re-screening transactions, and instituting substantial additional safeguards.
David Sproul, chairman of Starling Bank, publicly apologised for the identified failures and reassured stakeholders of the measures being taken to rectify past deficiencies. He stated, “We have learned the lessons of this investigation and are confident that these changes and the strength of our franchise put us in a strong position to continue executing our strategy…” This ongoing commitment to improvement reflects the bank’s aim of supporting sustainable growth within a robust risk management framework.
Starling Bank’s commitment to enhancing its systems underscores a dedication to aligning with regulatory expectations and ensuring financial integrity.
