Starling Bank fined £29m by FCA for financial crime system failings

Starling Bank has been fined just shy of £29m for financial crime failings related to its sanctions screening systems.

Starling saw rapid growth, going from about 43,000 customers in 2017 to 3.6 million by 2023 but failed in its efforts to tackle financial crime.

In 2021, when the FCA reviewed the financial crime controls at challenger banks, they found serious issues with Starling’s anti-money laundering and sanctions processes. It agreed to stop opening new accounts for high-risk customers until things improved, but it didn’t follow through. Between September 2021 and November 2023, Starling went ahead and opened over 54,000 accounts for 49,000 high-risk customers.

In early 2023, Starling realised that, since 2017, its automated system had only been checking a small portion of the people on the financial sanctions list. An internal review later uncovered deeper, systemic problems in how the bank was handling sanctions. Since then, Starling has reported several potential breaches to the authorities.

Therese Chambers, the FCA’s Joint Executive Director of Enforcement and Market Oversight, said:

“Starling’s controls for financial sanctions were shockingly poor. It left the door wide open for criminals and people under sanctions. To make matters worse, the bank didn’t properly comply with the FCA’s rules, which were put in place to lower the risk of it facilitating financial crime.”

This investigation was wrapped up in just 14 months, compared to the usual 42 months for cases closed in 2023/24, highlighting how the FCA is moving faster with enforcement. Starling has now launched programmes to fix these issues and strengthen its overall approach to financial crime. The FCA continues to keep a close eye on firms to make sure they have the right systems in place to manage financial crime risks.

Source: FCA