Source: Sharecast
The Financial Conduct Authority said measures used by Starling to tackle financial crime had not kept pace with its rapid growth. Starling has gone from 43,000 customers in 2017 to 3.6m in 2023.
In particular, the bank’s automated screening system had - since 2017 - only been screening against "a fraction" of the full list of those subject to financial sanctions.
Starling became aware of the issue in January 2023 and has reported "multiple potential breaches of financial sanctions to the relevant authorities," the FCA noted.
In addition, the FCA said Starling had failed to comply with an earlier order not open any new accounts for high-risk customers.
A review of challenger banks in 2021 had revealed "serious concerns" with Starling’s anti-money laundering and sanctions framework.
However, despite agreeing with the order, Starling opened 54,000 accounts for 49,000 high-risk customers between September 2021 and November 2023.
As a result, the FCA has fined Starling £28.96m, reduced from £40.96m after the bank agreed to resolve the matters.
Therese Chambers, 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."
Starling said it fully accepted the FCA's findings, adding that it "regrets and apologises for the events and shortcomings" that led to the fine.
David Sproul, chair, said: "We have invested heavily to put things right, including strengthening our board governance and capabilities.
"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 robust risk management and control framework."
Starling was founded in 2014.
