Starling Bank has been hit with a £29 million fine by the UK’s financial watchdog due to shortcomings in its financial crime screening procedures, which the regulator has labelled as “shockingly lax”. The Financial Conduct Authority (FCA) highlighted that the bank’s inadequate measures had left the financial system vulnerable to criminals and individuals subject to sanctions.
An investigation by the FCA revealed that Starling Bank had only been conducting screenings on a fraction of the complete list of individuals under financial sanctions. Additionally, the bank had repeatedly violated regulations by opening accounts for high-risk customers. During the period between September 2021 and November 2023, approximately 54,000 accounts were opened for 49,000 high-risk customers, according to the watchdog’s findings.
Therese Chambers, the joint executive director of enforcement and market oversight at the FCA, stated, “Starling’s financial sanction screening controls were shockingly lax. 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.”
Acknowledging the failings identified between December 2019 and November 2023, Starling Bank expressed regret and outlined the implementation of extensive additional safeguards to ensure compliance with regulatory standards. Chairman David Sproul issued an apology for the identified shortcomings and reassured customers and employees that corrective actions were being taken, including enhancements in board governance and capabilities.
Sproul affirmed, “We want to assure our customers and employees that these are historic issues. We have learned from this investigation and are confident that the changes made, along with the strength of our brand, position us well to continue pursuing our strategy of secure, sustainable growth, supported by a robust risk management and control framework.”