Laura WilesThe FCA has fined Starling Bank Limited approximately £29m for financial crime failings related to its financial sanctions screening process, and for repeatedly breaching a requirement not to open accounts for high-risk customers. The regulator noted that the bank’s financial crime measures did not keep pace with its rapid growth from approximately 43,000 customers in 2017 to 3.6m in 2023.
As part of its review of challenger banks in 2021, the FCA identified serious concerns with Starling’s AML and sanctions framework, which resulted in the bank agreeing to a requirement restricting it from opening new accounts for high-risk customers until this improved. The FCA found that Starling failed to comply, and had opened over 54,000 accounts for such customers between September 2021 and November 2023.
In January 2023, Starling discovered that its automated screening system had, since 2017, only been screening customers against some of the full list of those subject to financial sanctions. An internal review then identified systematic issues in its financial sanctions framework, and Starling has since reported multiple potential breaches of financial sanctions to relevant authorities.
Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA, described Starling’s screening controls as “shockingly lax”. The bank has now established programmes to remediate the breaches and enhance its financial crime control framework.
The FCA also noted the Starling case as an example of how it is improving the pace of its enforcement investigations, as this case took only 14 months from opening to achieving an outcome, compared to an average of 42 months for cased closed in 2023/24.