The FCA has fined Starling Bank (the Bank) £29m for failings in their financial crime systems and controls. As the FCA summarised it, the Bank’s financial crime controls “failed to keep pace with its growth”.  

The FCA Final Notice set out how the Bank underwent exponential growth from the first account opened in July 2016 to a customer base of approximately 3.6m in 2023. However, the growth in customer numbers and revenue was not matched by a corresponding growth and sophistication of its financial crime related systems and controls.

Concerns were first identified at the Bank as a result of a review the FCA conducted in 2021 into financial crime controls at various challenger banks. As part of that review the FCA identified serious concerns with the Bank’s anti-money laundering (AML) and financial sanctions framework. The Bank commenced an AML Enhancement Plan to address the concerns and voluntarily accepted a requirement from the FCA not to open any new accounts for high or higher risk customers while it improved its AML control framework (the VREQ). 

However, the Bank failed to implement the requirements of the VREQ and failed to monitor its compliance with it. As a result, over the relevant period, the Bank opened accounts for almost 50,000 high or higher-risk customers, in breach of the terms of the VREQ.

Further, in January 2023, the Bank identified failings in its sanctions screening controls, with only a fraction of the relevant sanctions lists being screened by the Bank. Although it remediated this issue swiftly, a subsequent review of its financial sanctions framework identified wide systemic issues. The FCA concluded that the Bank “failed to ensure that its screening of customers and payments was sufficient” to prevent breach of financial sanctions. 

In determining the penalty, the FCA took into account that the Bank had established programmes to remediate the breaches and to enhance its wider financial crime control framework. Further, the Bank qualified for a 30% discount for agreeing to resolve the matters, reducing the fine from £40m to £29m. 

The FCA also took the opportunity in the accompanying press release to flag the speed at which they had completed the investigation; 14 months contrasted to an average investigation time of 42 months. This focus on speeding up outcomes was referred to in a recent speech by FCA Joint Executive Director of Enforcement and Market Oversight, Therese Chambers, which we also wrote about in the below articles.

• Naming and shaming: the FCA stands firm
• Is less more? The FCA's evolving approach to enforcement