Wed Oct 02 15:19:38 UTC 2024: ## Starling Bank Fined £29 Million for Lax Financial Crime Controls

**London, UK -** Starling Bank, a popular UK challenger bank, has been fined £29 million (around $39 million) by the Financial Conduct Authority (FCA) for failing to implement adequate financial crime controls. The FCA found that from 2021 to 2023, the bank lacked proper anti-money laundering processes, allowing thousands of high-risk customers to open accounts.

The FCA’s investigation was triggered by a wider review of financial crime controls within challenger banks in 2021, following the collapse of German fintech Wirecard, which had also obtained a banking license. The regulator’s scrutiny of fintech startups has intensified in recent years to prevent similar situations.

Despite the FCA previously requiring Starling to halt the onboarding of high-risk customers until it rectified its processes, approximately 49,000 such customers managed to open accounts between September 2021 and November 2023. In total, 54,000 accounts were opened by high-risk customers, while the bank saw its customer base grow from 43,000 in 2021 to 4.2 million today.

“Starling’s financial sanction screening controls were shockingly lax. It left the financial system wide open to criminals and those subject to sanctions,” said Therese Chambers, FCA 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.”

Starling has cooperated with the FCA and agreed to implement changes to its processes, resulting in a 30% reduction in the initial fine. “We have invested heavily to put things right, including strengthening our board governance and capabilities,” said Starling chairman David Sproul. “These are historic issues. We have learned the lessons of this investigation and are confident that these changes… put us in a strong position to continue executing our strategy of safe, sustainable growth.”

The FCA’s action highlights the ongoing challenges faced by challenger banks in maintaining robust financial crime controls as they rapidly expand. While Starling has faced regulatory scrutiny, other challenger banks like Monzo and Revolut have also come under investigation in recent years.

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