Starling Bank Fined £29M For Financial Crime Systems Failings

The challenger bank would’ve been fined nearly £41m, but it agreed to resolve the matters and so qualified for a 30% discount under the FCA’s processes.

Challenger bank Starling Bank has been fined £29 million by the UK’s financial regulator for failings in its financial crime systems and controls.

In 2021, the Financial Conduct Authority (FCA) reviewed financial crime controls at challenger banks, and identified “serious” concerns with the anti-money laundering and sanctions framework in place at Starling.

The neobank then agreed to a requirement restricting it from opening new accounts for “high-risk” customers until this improved, but failed to comply—opening over 54,000 accounts for 49,000 such customers between September 2021 and November 2023, the regulator said.

In January 2023, Starling became aware that its automated screening system had, since 2017, only been screening customers against a fraction of the full list of those subject to financial sanctions.

A subsequent internal review identified systemic issues in its financial sanctions framework. The challenger bank has since reported multiple potential breaches of financial sanctions to the relevant authorities.

The challenger bank would’ve been fined nearly £41m, but it agreed to resolve the matters and so qualified for a 30% discount under the FCA’s processes.

The FCA stated that Starling has established programmes to remediate these breaches and to enhance its wider financial crime control framework.

This particular case took 14 months from opening to achieving an outcome, compared to an average of 42 months for cases closed in 2023/24.

Speaking on the fine and the reasons behind it, Therese Chambers, who serves as joint executive director of enforcement and market oversight at the FCA, said: “Starling’s financial sanction screening controls were shockingly lax.

“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.”

One of the prior times DIGIT reported on Starling was in August this year, when the Competition and Markets Authority’s (CMA’s) latest banking satisfaction survey was released.

It found that the challenger bank is one of the top-rated personal and business current account providers in the UK.