The Financial Conduct Authority (FCA) has imposed a £29 million fine on Starling Bank for significant shortcomings in its anti-money laundering (AML) and financial sanctions screening processes.
According to the FCA, Starling repeatedly breached a requirement to avoid opening accounts for high-risk customers, a directive implemented after a 2021 review of AML controls at challenger banks revealed serious concerns. Despite the warning, Starling opened over 54,000 accounts for 49,000 high-risk customers during the following two years.
The issue arose when Starling discovered last year that its automated screening system, in place since 2017, had only been scanning a fraction of the full list of individuals subject to financial sanctions. An internal review later identified systemic issues, with the bank reporting multiple potential breaches to the authorities.
The review also found that Starling’s senior management lacked the experience and capability to effectively implement the FCA’s requirements, leading to widespread lapses in compliance.
Therese Chambers, FCA’s Joint Executive Director of Enforcement and Market Oversight, stated, “Starling’s financial sanction screening controls were shockingly lax, leaving the financial system exposed to criminals and individuals under sanctions. The bank further compounded these failings by not complying with the agreed FCA requirements, which were aimed at reducing the risk of financial crime.”
In response to the breaches, Starling Bank has implemented remediation programs to strengthen its financial crime control framework. The bank received a 30% discount on what would have been a £41 million fine, and it has since expressed regret and issued an apology for the failures.