Starling Bank Hit with $39 Million Fine for Facilitating Financial Crime

The FCA fined Starling Bank £29 million ($39 million) for failing to implement sufficient financial crime controls from 2021 to 2023.
Despite being ordered to halt onboarding high-risk customers, around 49,000 such accounts were opened during the period.
Starling’s chairman apologized and outlined steps taken to strengthen the bank’s governance, emphasizing that these issues have been addressed.

Starling Bank, a leading U.K. challenger bank, has been fined £29 million (about $39 million) by the Financial Conduct Authority (FCA). The regulator found the bank lacked adequate financial crime controls from 2021 to 2023. Also, it has been operating for over a decade, but the FCA began scrutinizing challenger banks more closely in 2021 with a comprehensive review of their financial crime controls.

Starling expanded rapidly, growing from 43,000 customers in 2017 to 3.6 million in 2023. However, its financial crime prevention measures didn’t keep up with this growth.

The regulator had previously ordered Starling to stop accepting high-risk customers until it improved its anti-money laundering procedures.

However, about 49,000 high-risk customers still managed to open accounts between September 2021 and November 2023. In total, 54,000 high-risk accounts were opened, according to the FCA.

In a press release announcing the sanction, Therese Chambers, Joint Executive Director of Enforcement and Market Oversight, said:

“Starling’s financial sanction screening controls were shockingly lax. It left the financial system wide open to criminals and those subject to sanctions.”

Starling chairman David Sproul apologized for the shortcomings highlighted by the FCA and emphasized that the bank has made significant investments to address the issues, including strengthening its board governance and capabilities. He also assured customers and employees that these are past issues and said the bank has learned from the investigation.

Additionally, Sproul expressed confidence that recent changes and the strength of the organization position Starling for safe, sustainable growth, backed by a strong risk management and control framework.

Edited by Harshajit Sarmah