Starling Bank, a UK-based app-only bank, has been fined £29m by the financial regulator for multiple breaches related to financial sanctions screening. The Financial Conduct Authority (FCA) criticized Starling for its lax controls, which left the financial system vulnerable to criminals and those subject to sanctions. The fine was reduced by 30% because Starling agreed to resolve the issues.
The FCA had previously identified serious concerns with Starling’s anti-money laundering and sanctions framework as far back as 2021. Despite agreeing to regulatory restrictions, Starling failed to comply and opened over 54,000 accounts for high-risk customers between 2021 and 2023.
The regulator found that Starling’s financial sanction controls were shockingly lax and the bank failed to properly comply with FCA requirements. The bank’s automated screening system only checked a fraction of names on the UK’s consolidated list, resulting in oversights and potential breaches.
Starling acknowledged the FCA’s findings, apologized, and promised to invest heavily in improving its controls. The bank has vowed to conduct historic financial sanctions screening reviews of its entire customer base, which is expected to result in significant additional costs.
The FCA also highlighted that the challenger bank sector as a whole needs to improve its financial crime controls. Starling’s senior management lacked the experience and capability to introduce adequate controls, according to the regulator. Despite the challenges, Starling remains confident in its ability to continue executing its growth strategy while prioritizing strong risk management and compliance frameworks.
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