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The Financial Conduct Authority (FCA) has fined Starling Bank £29 million for significant lapses in its anti-money laundering (AML) screening and non-compliance with sanctions requirements.
According to the FCA, Starling repeatedly violated a directive prohibiting the opening of accounts for high-risk customers, a measure implemented following a 2021 review that raised “serious concerns” about the bank’s AML and sanctions framework.
Despite this, Starling opened over 54,000 accounts for 49,000 high-risk customers over the following two years. The bank discovered last year that its automated screening system, operational since 2017, had been checking customer details against only a fraction of the full list of individuals subject to financial sanctions.
An internal review subsequently identified deep-rooted systemic issues, prompting Starling to report multiple potential breaches of financial sanctions to the relevant authorities. The review also revealed that the bank’s senior management team lacked the necessary experience and capability to effectively implement the FCA’s requirements.
Therese Chambers, Joint Executive Director for Enforcement and Market Oversight at the FCA, said, “Starling’s financial sanction screening controls were shockingly lax. It left the financial system exposed to criminals and individuals subject to sanctions. The bank compounded this by failing to properly comply with FCA requirements that were specifically designed to mitigate the risk of Starling facilitating financial crime.”
Starling Bank has since initiated remediation programs aimed at addressing the breaches and strengthening its financial crime control framework. As a result of its efforts, the bank received a 30% reduction on the original fine, which would have been £41 million.
In a statement, Starling Bank expressed regret and apologised for the failings, acknowledging the need for stronger controls in safeguarding the financial system.
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