Starling Bank, a prominent UK app-based bank, has been fined £29m by the Financial Conduct Authority for multiple breaches of financial sanctions, resulting from the bank’s “shockingly lax” controls and failure to comply with regulatory requirements. The fine was reduced by 30% from £41m as the bank agreed to resolve the issues. This is not the first time Starling has faced criticism, with concerns being raised back in 2021 regarding anti-money laundering and sanctions framework failures.
The bank, known for its rapid growth and app-only offering, has also had issues with checks on borrowers for taxpayer-backed Covid-19 loans. The FCA found serious deficiencies in Starling’s financial sanction screening controls, which left the financial system vulnerable to criminal abuse. Despite agreeing to regulatory restrictions to improve its controls, the bank opened over 54,000 accounts for 49,000 high-risk customers between September 2021 and November 2023.
The FCA highlighted that Starling’s senior management lacked the necessary experience and oversight to implement proper controls and monitor compliance. The bank has since promised to invest significantly in financial crime compliance and conduct historic financial sanctions screening reviews. The FCA also emphasized that the issues were not limited to Starling and that the challenger bank sub-sector as a whole needed to bolster financial crime controls.
Starling has accepted the FCA’s findings, apologized for the failings, and assured customers and employees that changes have been implemented to ensure safe, sustainable growth supported by a robust risk management framework. Additionally, the bank has promised to conduct reviews of its entire customer base and payments.
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