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Starling Bank Faces £28.9 Million Fine from FCA over Financial Crime

Pat Crawley Pat Crawley Send an email
0 6 17 minutes read
starling-bank-faces-28.9-million-fine-from-fca-over-financial-crime

Thursday, 03/10/2024 | 11:01 GMT by Tareq Sikder

  • The bank’s growth from 43K to 3.6 million customers outpaced improvements in its financial crime controls.

Starling Bank

The Financial Conduct Authority (FCA) has imposed a fine of £28,959,426 on Starling Bank Limited. The fine is for failings related to financial crime, specifically concerning the bank’s financial sanctions screening process.

The FCA also found that Starling repeatedly breached a requirement prohibiting it from opening accounts for high-risk customers.

Starling’s High-Risk Account Openings

Starling Bank experienced rapid growth in its customer base, increasing from around 43,000 customers in 2017 to 3.6 million in 2023. However, the measures the bank implemented to fight financial crime did not keep pace with this expansion.

In 2021, the FCA reviewed the financial crime controls of various challenger banks and identified significant concerns regarding Starling’s anti-money laundering and sanctions framework.

As a result of these findings, the FCA mandated that Starling restrict the opening of new accounts for high-risk customers until improvements were made. Despite this requirement, Starling opened over 54,000 accounts for 49,000 high-risk customers between September 2021 and November 2023.

FCA Investigation Takes 14 Months

In January 2023, Starling discovered that its automated screening system had only screened customers against a small portion of the complete list of individuals subject to financial sanctions since 2017.

An internal review revealed systemic issues within its financial sanctions framework. Following this review, Starling reported multiple potential breaches of financial sanctions to the appropriate authorities.

Therese Chambers, FCA, Source: LinkedIn

Therese Chambers, FCA, Source: LinkedIn

“Starling’s financial sanction screening controls were shockingly lax. It left the financial system wide open to criminals and those subject to sanctions,” commented Therese Chambers, Joint Executive Director of Enforcement and Market Oversight.

“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.”

The investigation into Starling’s practices took 14 months, significantly shorter than the average of 42 months for cases concluded in 2023/24. This timeline reflects the FCA’s efforts to expedite its enforcement investigations.

In response to these findings, Starling Bank has implemented programs to address the breaches and improve its overall financial crime control framework. The FCA will continue to monitor financial institutions to ensure they have the appropriate systems and controls in place to manage financial crime risks.

The Financial Conduct Authority (FCA) has imposed a fine of £28,959,426 on Starling Bank Limited. The fine is for failings related to financial crime, specifically concerning the bank’s financial sanctions screening process.

The FCA also found that Starling repeatedly breached a requirement prohibiting it from opening accounts for high-risk customers.

Starling’s High-Risk Account Openings

Starling Bank experienced rapid growth in its customer base, increasing from around 43,000 customers in 2017 to 3.6 million in 2023. However, the measures the bank implemented to fight financial crime did not keep pace with this expansion.

In 2021, the FCA reviewed the financial crime controls of various challenger banks and identified significant concerns regarding Starling’s anti-money laundering and sanctions framework.

As a result of these findings, the FCA mandated that Starling restrict the opening of new accounts for high-risk customers until improvements were made. Despite this requirement, Starling opened over 54,000 accounts for 49,000 high-risk customers between September 2021 and November 2023.

FCA Investigation Takes 14 Months

In January 2023, Starling discovered that its automated screening system had only screened customers against a small portion of the complete list of individuals subject to financial sanctions since 2017.

An internal review revealed systemic issues within its financial sanctions framework. Following this review, Starling reported multiple potential breaches of financial sanctions to the appropriate authorities.

Therese Chambers, FCA, Source: LinkedIn

Therese Chambers, FCA, Source: LinkedIn

“Starling’s financial sanction screening controls were shockingly lax. It left the financial system wide open to criminals and those subject to sanctions,” commented Therese Chambers, Joint Executive Director of Enforcement and Market Oversight.

“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.”

The investigation into Starling’s practices took 14 months, significantly shorter than the average of 42 months for cases concluded in 2023/24. This timeline reflects the FCA’s efforts to expedite its enforcement investigations.

In response to these findings, Starling Bank has implemented programs to address the breaches and improve its overall financial crime control framework. The FCA will continue to monitor financial institutions to ensure they have the appropriate systems and controls in place to manage financial crime risks.

Tareq Sikder

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A Forex technical analyst and writer who has been engaged in financial writing for 12 years.

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