Starling Bank was fined £29 million by the UK financial regulator for lapses in its financial crime prevention systems.
- The bank reportedly opened 49,000 accounts for ‘high-risk’ customers between 2021 and 2023, violating FCA requirements.
- The FCA discovered inadequate crime prevention measures despite a substantial increase in Starling’s user base.
- The case resolution time was significantly faster than the average, showcasing enhanced regulatory enforcement efficiency.
- Starling Bank has accepted the findings and committed to implementing extensive safeguards and compliance measures.
Starling Bank has been subjected to a £29 million fine imposed by the UK financial watchdog due to significant inadequacies in its financial crime prevention systems. This disciplinary action followed the bank’s failure to prevent the opening of accounts for ‘high-risk’ customers, as dictated by the Financial Conduct Authority (FCA).
The FCA identified that Starling Bank violated its obligations by approving 49,000 accounts for ‘high-risk’ individuals between 2021 and 2023. This breach occurred amidst a rapid expansion in Starling’s user base, which grew from 43,000 in 2017 to almost four million by 2023. Despite this growth, the bank did not enforce sufficient measures to counteract potential financial crimes.
In 2021, the FCA raised ‘serious concerns’ over Starling’s crime prevention protocols, leading to the introduction of restrictions on high-risk accounts. According to Therese Chambers, the FCA’s joint executive director of enforcement and market oversight, the bank’s ‘shockingly lax’ controls compromised the integrity of the financial system by making it vulnerable to criminal exploitation and by failing to adhere to FCA directives.
The swift 14-month investigation and resolution of this case, compared to the usual 42-month timeframe, highlights the FCA’s improved efficiency in enforcement actions. This expedited process underscores a commitment to timely and effective regulatory interventions.
In response, Starling Bank has publicly acknowledged and accepted the FCA’s findings. The bank has embarked on a comprehensive re-screening of transactions and has implemented substantial additional safeguards. David Sproul, chairman of Starling Bank, apologised for these past deficiencies and emphasised the significant investments made to bolster the bank’s governance and risk management frameworks.
Starling Bank’s commitment to addressing past failures signifies a proactive approach towards securing its operational integrity.
