Starling Bank has been penalised £29 million by the UK financial watchdog due to significant deficiencies in its crime prevention systems.
- The bank was found to have repeatedly breached protocols by opening accounts for ‘high-risk’ customers.
- The Financial Conduct Authority (FCA) noted a substantial increase in Starling’s user base without corresponding anti-crime measures.
- Serious issues were identified in 2021, revealing that 49,000 high-risk accounts were opened over two years.
- Starling Bank has acknowledged these failings, promising extensive safeguards and improvements.
Starling Bank has faced a substantial penalty from the UK Financial Conduct Authority (FCA), amounting to £29 million, due to its inadequacies in preventing financial crime. This fine highlights significant lapses in the bank’s systems, notably in its financial sanctions screening process.
The regulator discovered that Starling Bank, despite its valuation of over $3 billion, opened accounts for ‘high-risk’ individuals, contravening established requirements. This breach occurred alongside a dramatic increase in its customer base, rising from 43,000 in 2017 to nearly four million in 2023, without implementing effective measures to mitigate financial crime risks.
In 2021, the FCA expressed ‘serious concerns’ regarding Starling’s crime prevention strategies, prompting a mandate to limit high-risk accounts. Over the ensuing two years, 49,000 such accounts were opened, emphasising the bank’s failure to comply with regulatory standards.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, criticised the bank’s controls as shockingly lax, suggesting that these lapses left the financial system vulnerable to exploitation by criminals and sanctioned individuals. Chambers remarked, ‘Starling’s financial sanction screening controls were shockingly lax.’
The FCA’s investigation, spanning 14 months, was markedly quicker than the usual duration, reflecting an improvement in the agency’s enforcement operations.
Starling Bank has accepted the FCA’s findings, undertaking a comprehensive review of its processes and introducing numerous safeguards to address these issues. David Sproul, chairman of Starling Bank, formally apologised, stating the bank’s commitment to rectifying past errors and reinforcing its governance and risk management frameworks.
Starling Bank’s commitment to implementing robust controls is central to restoring trust and ensuring compliance with financial regulations.
