(Bloomberg) -- Starling Bank was fined £29 million ($38.5 million) for what regulators described as “shockingly lax” controls around risky customers.
The British lender had agreed to restrict new services for high-risk clients in 2021 after the Financial Conduct Authority raised concerns about its money-laundering and sanctions checks.
Despite this, the bank opened over 54,000 accounts for 49,000 such customers between September 2021 and November 2023, including 294 customers who had previously been exited by Starling for financial crime reasons, according to the regulator.
Starling found last year that its automated screening system had, since 2017, only been checking customers against a fraction of the full financial sanctions list, the FCA added.
The bank said it reported suspected breaches to authorities, including the Office of Financial Sanctions Implementation. Wednesday’s notice marks a rare admission by a UK lender that it had potentially run afoul of sanctions.
“Starling’s financial sanction screening controls were shockingly lax,” said Therese Chambers, joint executive director of enforcement and market oversight at the FCA. “It left the financial system wide open to criminals and those subject to sanctions. It compounded this by failing to properly comply with FCA requirements it had agreed to, which were put in place to lower the risk of Starling facilitating financial crime.”
Starling Bank said it fully accepted the FCA’s findings, adding it “regrets and apologises” for its shortcomings. Starling has paid the fine, improved its controls and also invested in strengthening its board governance and capabilities, according to Chairman David Sproul.
(Adds sanctions reporting in fifth paragraph.)
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