Starling Bank has been fined £29m by the UK financial watchdog for failings in its financial sanctions screening system.
The Financial Conduct Authority (FCA) said on Wednesday that Starling, worth over $3bn, repeatedly breached a requirement to not open accounts for “high-risk” customers.
According to the regulator, Starling’s jump in users from 43,000 in 2017 to almost four million in 2023 did not see the fintech implement adequate measures to prevent financial crime.
The FCA identified “serious concerns” with crime prevention measures at Starling in 2021, prompting a requirement to restrict high-risk accounts.
According to the FCA, Starling opened 49,000 account for high-risk customers between 2021 and 2023.
“Starling’s financial sanction screening controls were shockingly lax,” said Therese Chambers, joint executive director of enforcement and market oversight at the FCA.
“It left the financial system wide open to criminals and those subject to sanctions. 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 case took 14 months from opening to outcome, compared to the 2023/24 average of 42 months. The FCA said it exemplified the improved pace of its enforcement investigations.
Starling Bank said it fully accepts the findings set out by the FCA and that it has cooperated fully with the regulator.
The bank said it has completed a “detailed re-screening of transactions” and has introduced “extensive additional safeguards”.
“I would like to apologise for the failings outlined by the FCA and to provide reassurance that we have invested heavily to put things right, including strengthening our board governance and capabilities,” said David Sproul, chairman of Starling Bank.
“We want to assure our customers and employees that these are historic issues. We have learned the lessons of this investigation and are confident that these changes and the strength of our franchise put us in a strong position to continue executing our strategy of safe, sustainable growth, supported by a robust risk management and control framework.”
Read more: Starling Bank signals IPO prep with new job listing