THE Financial Conduct Authority (FCA) has fined Starling Bank £29 million (S$49.6 million) after identifying shortcomings in the British digital lender’s anti-money laundering controls and sanctions screening systems dating back to 2017.
The watchdog said on Wednesday (Oct 2) that Starling’s measures to tackle financial crime did not keep pace with its growth, and it had repeatedly breached a requirement not to open accounts for high-risk customers.
The bank had opened more than 54,000 accounts for 49,000 high-risk customers between September 2021 and November 2023, the FCA said.
It first identified problems at Starling in 2021 as part of a broader sweep of financial crime controls across the so-called ‘challenger bank’ sector.
In January 2023, Starling discovered its automated sanctions screening system had only screened customers against a fraction of the full list of individuals subject to financial sanctions since 2017.
A subsequent internal review identified systemic issues in its financial sanctions framework, and the bank has since reported multiple potential breaches of financial sanctions to the relevant authorities, the regulator said.
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“Starling’s financial sanction screening controls were shockingly lax. It left the financial system wide open to criminals and those subject to sanctions,” Therese Chambers, joint executive director of enforcement and market oversight, said in a statement.
“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,” she added.
In a separate statement, Starling said it fully accepts the FCA findings and has completed both a detailed re-screening of transactions and an in-depth back book review of customer accounts in respect of the breaches.
“I would like to apologise for the failings outlined by the FCA and to provide reassurance that we have invested heavily to put things right, including strengthening our board governance and capabilities,” David Sproul, chairman of Starling Bank, said.
“We want to assure our customers and employees that these are historic issues,” he added.
The lender, which has grown its customer base to 3.6 million in 2023 from 43,000 in 2017, would have been fined £41 million but qualified for a 30 per cent discount due to cooperation with the regulator. REUTERS
