This week, the FCA imposed a £29 million fine on Starling Bank Limited for “shockingly lax” financial sanctions screening controls. As the fast-growing ‘challenger’ bank expanded, its financial crime measures “failed to keep pace”, leaving the financial system “wide open” to criminals and sanctioned individuals.
In its Final Notice to Starling Bank, the FCA outlined how the bank contravened a voluntarily accepted requirement (VReq) by opening over 54,000 accounts for high or higher risk customers. Under the terms of the VReq it was restricted from doing so while addressing deficiencies in its anti-money laundering (AML) framework identified during an earlier review of financial crime controls at challenger banks conducted by the FCA in 2021.
The notice further revealed that Starling Bank’s automated screening system had been checking only “a fraction” of names on the Consolidated List, with a subsequent review uncovering “wider systemic issues” in its financial sanctions framework.
This case underscores the critical importance of designing, implementing, and maintaining an effective AML and financial sanctions screening framework. It also highlights the difficulties in scaling such frameworks across a rapidly growing client base amid evolving international sanctions.
While this incident involves the banking sector, private market firms must also be vigilant about their AML obligations, especially as their investor bases expand due to the ongoing retailisation of the asset class.
IDR provides a one-and-done solution, authenticating investors to the highest international standards and screening all investor profiles held on our platform daily against international sanctions lists. We also provide support and guidance with the design and implementation of robust and risk-based systems and controls to mitigate the risks of money laundering and support the effective enforcement of financial sanctions.
Read the FCA’s full statement here – https://www.fca.org.uk/news/press-releases/fca-fines-starling-bank-failings-financial-crime-systems-and-controls.
