The UK financial regulator, Financial Conduct Authority (FCA), has hit Goldman-Backed Starling Bank with a £29M (~$38.5M) fine over failure to screen high-risk crypto platforms.
According to FCA, Starling Bank was fined “for financial crime failings related to its financial sanctions screening.” The regulator added that the bank has repeatedly violated an order by opening accounts for high-risk customers.
FCA Fined Starling Bank £29M For Failings In Their Financial Crime Controls
On Wednesday, October 2, the UK’s FCA released a statement stating that it “has fined British digital lender Starling Bank Limited £28,959,426 (~$38.5M) for financial crime failings related to its financial sanctions screening.”
Prior to the fine, Starling Bank, one of the challenger banks, experienced a rapid growth in its customer base from about 43,000 in 2017 to 3.6M customers in 2023. However, the measures put in place by the FCA to stop financial crime have not kept pace with this growth.
For instance, in 2021, the financial regulator reviewed financial crime controls at different banks and discovered severe issues with Starling Bank’s AML and sanctions framework.
Following FCA’s restriction, Starling agreed to stop opening new accounts for high-risk crypto platforms until this issue is resolved.
However, the bank soon failed to follow the agreement and continued with opening more than 54K accounts for 49K high-risk clients between September 2021 and November 2023.
This led to the recent fine imposed by the financial regulator on the bank.
Starling Bank Apologized For The Failings
Starling Bank has apologized in response to the FCA’s fine. The bank stated that it was sorry for its failure to screen high-risk clients and for violating the regulator’s order. The bank added that it had conducted detailed screening and an in-depth back book review of all of its client’s accounts.
According to Starling Bank’s chairman, David Sproul,
I would like to apologize for Starling’s failings outlined by the UK FCA and to give reassurance that we have invested heavily to put things right…
The chairman added that the bank has learnt its lessons and is adopting “a robust risk management and control framework.”
Starling Bank previously announced its plans to go public as early as 2023, which made lots of customers view the bank as a potential IPO candidate. However, the bank has moved back its expected timing to an unknown date.
FCA’s Continuous Move On Cracking Down On Illegal Crypto Activities
The recent fine imposed on Starling Bank by the UK FCA is just one of the many recent moves by the financial regulator against illegal crypto activities in the country.
For instance, Nexo was forced to halt onboarding new UK clients last year due to failure to meet all FCA guidelines.
The crypto lending platform resumed onboarding new UK clients earlier last month after it upgraded its platform to observe full compliance with the FCA’s Guidelines.
Also, the UK FCA charged a 45-year-old businessman, Olumide Osunkoya, to court last month for operating an illegal network of crypto ATMs without registration.
