Starling Bank Limited fined £29 million for failings in financial crime controls

Starling Bank grew quickly, from approximately 43,000 customers in 2017 to 3.6 million in 2023. However, measures to tackle financial crime did not keep pace with its growth.

When the FCA reviewed financial crime controls at challenger banks in 2021, it identified serious concerns with the anti-money laundering and sanctions framework in place at Starling Bank. The bank duly agreed to a requirement restricting it from opening new accounts for high-risk customers until this improved.

However, Starling Bank failed to comply and opened over 54,000 accounts for 49,000 high-risk customers between September 2021 and November last year.

In January 2023, Starling Bank became aware that, since 2017, its automated screening system had only been screening customers against a fraction of the full list of those subject to financial sanctions. A subsequent internal review identified systemic issues in its financial sanctions framework. Starling Bank has since reported multiple potential breaches of financial sanctions to the relevant authorities.

“Shockingly lax”

Therese Chambers, joint executive director of enforcement and market oversight at the FCA, commented: “Starling Bank’s financial sanction screening controls were shockingly lax. It left the financial system wide open to criminals and those subject to sanctions. The bank compounded this by failing to properly comply with FCA requirements to which it had agreed and had been put in place to lower the risk of Starling Bank facilitating financial crime.”

This case took 14 months from its opening to achieving an outcome compared to an average of 42 months for cases closed in 2023-2024. This is an example of how the FCA is improving the pace of its enforcement investigations.

Starling Bank has now established programmes designed to remediate these breaches and enhance its wider financial crime control framework.

For its part, the FCA continues to supervise firms to ensure that they have the right systems and controls in place to manage financial crime risks.