The Financial Conduct Authority has imposed a £29 million fine on Starling Bank due to deficiencies in its financial sanctions screening processes.
According to the FCA, Starling “repeatedly breached a requirement not to open accounts for high-risk customers.” This requirement was implemented following a 2021 review that uncovered “serious concerns” regarding the bank’s anti-money laundering and sanctions framework.
Despite this, Starling opened over 54,000 accounts for 49,000 high-risk customers in the subsequent two years. This was largely due to the discovery last year that the bank’s automated screening system had been only partially screening customers against the complete list of individuals subject to financial sanctions since 2017.
An internal review revealed systemic issues, prompting Starling to report multiple potential breaches of financial sanctions to the authorities. The review also highlighted that the bank’s senior management collectively “lacked the experience and capability to effectively implement” the FCA’s requirements.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, stated: “Starling’s financial sanction screening controls were shockingly lax, leaving the financial system vulnerable to criminals and sanctioned individuals. The bank compounded this issue by failing to adhere to FCA requirements established to mitigate the risk of facilitating financial crime.”
In response to the violations, Starling has implemented programs to address the breaches and enhance its financial crime control framework, earning a 30% discount on what would have been a £41 million fine. The bank has expressed that it “regrets and apologises” for its failings.