The Financial Conduct Authority (FCA) has fined Starling Bank Limited £28,959,426 for failings related to its financial crime systems, particularly in its financial sanctions screening.
The bank also breached rules by opening accounts for high-risk customers despite a requirement not to do so.
Starling experienced rapid growth, increasing from about 43,000 customers in 2017 to 3.6 million by 2023.
However, the FCA found that its financial crime measures did not keep pace with this growth.
When the FCA reviewed the financial crime controls at challenger banks in 2021, it found serious issues with Starling’s anti-money laundering (AML) and sanctions framework.
The bank agreed to restrictions on opening new accounts for high-risk customers until improvements were made, but it failed to comply, creating over 54,000 accounts for 49,000 high-risk customers between September 2021 and November 2023.
In January 2023, Starling discovered that its automated screening system had been screening customers against only a fraction of the full list of those subject to financial sanctions since 2017.
An internal review revealed systemic issues in its financial sanctions framework, and Starling reported multiple potential breaches of financial sanctions to the relevant authorities.
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 has established programmes to remediate these breaches and to enhance its wider financial crime control framework.
The FCA continues to supervise firms to ensure that they have the right systems and controls to manage financial crime risks.
David Sproul, chairman of Starling Bank, said: “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.
“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.”
