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FCA Fines Starling Bank Over £28 Million for Financial Crime Failures

In a landmark decision, the Financial Conduct Authority (FCA) has imposed a hefty £28,959,426 fine on Starling Bank for its failure to comply with financial crime regulations. Starling, a digital challenger bank, experienced rapid growth between 2016 and 2023. However, its anti-money laundering (AML) and financial sanctions controls did not scale accordingly.

The FCA’s review, which began in 2021, identified serious weaknesses in Starling’s financial crime framework. Despite introducing an AML Enhancement Plan, Starling breached regulatory requirements known as the VREQ (Voluntary Requirement), designed to prevent high-risk accounts from being opened without robust oversight. Astonishingly, 54,359 accounts for 49,183 high-risk customers were created during the review period in violation of the VREQ.

Additionally, Starling’s automated sanctions screening system failed to detect potential risks, screening customers only against a fraction of the required names on the sanctions list. This resulted in at least one sanctioned individual being able to open an account undetected. The FCA stressed the importance of robust systems to detect and prevent such breaches.

Starling has since initiated a comprehensive remediation program, including enhanced controls, increased compliance resources, and a new financial crime risk strategy. These improvements are designed to bring the bank’s financial crime framework up to industry standards and prevent further violations.

This case underscores the importance of scalable financial crime controls, especially for rapidly growing digital banks. It serves as a critical reminder for all financial institutions to maintain compliance with regulatory standards, particularly in the areas of AML and sanctions screening.


Key Takeaways:

  • Rapid Growth, Inadequate Controls: Starling’s systems failed to keep up with its customer base growth, leading to financial crime risks.
  • Breaches of Regulatory Requirements: The FCA found multiple violations, particularly in the onboarding of high-risk accounts and sanctions screening.
  • FCA’s Enforcement: This fine signals the FCA’s commitment to enforcing financial crime regulations, particularly in the rapidly evolving digital banking sector.

For more details, the FCA’s full notice can be found here.

About Michael Rasmussen

Michael Rasmussen is the founder of United Atlantic Legal Services. He is a licensed attorney in Florida and registered solicitor in the United Kingdom. Michael has acted as General Counsel and Chief Compliance Officer to several investment advisers, including private fund managers, responsible for the management of billions of dollars in client assets.  

Michael is also the founder of FinProLaw, an online learning platform where Michael has created courses designed for investment adviser compliance professionals. These courses include: 

  • Investment Adviser Compliance Essential for Chief Compliance Officers 
  • Foundations of Investment Adviser Compliance 
  • What is a “Security”? 
  • Investment Adviser Marketing Rule 
  • Regulation A – Exemption from Registration 
  • Regulation Crowdfunding – Exemption from Registration 
  • Regulation D – Exemption from Registration 

Michael can also be found on LinkedIn.

Investment adviser firms who are also clients of United Atlantic Legal Services can receive many of these courses at a significantly reduced fee or, in some cases, at no expense. Contact us today or visit the FinProLaw to learn more.