Starling Bank has been fined £29 million by the Financial Conduct Authority (FCA) for its failure to maintain adequate financial crime controls, which left the financial system vulnerable to exploitation by criminals and those subject to sanctions. The FCA found that the bank’s rapid expansion, growing from 43,000 customers in 2017 to 3.6 million by 2023, outpaced its ability to implement effective anti-money laundering (AML) and sanctions screening measures. This led to the opening of over 54,000 accounts for high-risk customers between 2021 and 2023, earning the bank £900,000 in fees and interest, despite agreeing to restrictions designed to prevent such actions.
The FCA’s investigation revealed systemic issues in Starling’s financial sanctions framework, including the failure of its automated system to screen customers properly. The bank discovered in 2023 that its system had only been checking customers against a fraction of the full list of individuals subject to financial sanctions, leading to multiple potential breaches. Additionally, 294 customers previously flagged for financial crimes were able to reopen accounts, further exacerbating the bank's shortcomings. Starling also failed to screen international customers for sanctions beyond UK nationals, even as they handled transactions in foreign currencies like the US dollar.
In response to the FCA’s findings, Starling has apologized and paid the fine in full. The bank has since rescreened customer transactions, strengthened its governance and internal controls, and introduced new safeguards to prevent future breaches. Starling’s founder, Anne Boden, who stepped down as CEO in 2023, denied earlier accusations of improper loan reviews during the Covid crisis and highlighted the bank's efforts to correct its failings. Starling's plans for a public listing have been delayed, and the FCA noted that the fine was reduced from £41 million due to the bank's cooperation in resolving the matter.
